Correlation Between AES Corp and Engie SA
Can any of the company-specific risk be diversified away by investing in both AES Corp and Engie SA at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining AES Corp and Engie SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AES Corp Unit and Engie SA ADR, you can compare the effects of market volatilities on AES Corp and Engie SA and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in AES Corp with a short position of Engie SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of AES Corp and Engie SA.
Diversification Opportunities for AES Corp and Engie SA
Significant diversification
The 3 months correlation between AES and Engie is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding AES Corp Unit and Engie SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engie SA ADR and AES Corp is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on AES Corp Unit are associated (or correlated) with Engie SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engie SA ADR has no effect on the direction of AES Corp i.e., AES Corp and Engie SA go up and down completely randomly.
Pair Corralation between AES Corp and Engie SA
If you would invest 8,496 in AES Corp Unit on August 28, 2024 and sell it today you would earn a total of 0.00 from holding AES Corp Unit or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
AES Corp Unit vs. Engie SA ADR
Performance |
| Timeline |
| AES Corp Unit |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Engie SA ADR |
AES Corp and Engie SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AES Corp and Engie SA
The main advantage of trading using opposite AES Corp and Engie SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AES Corp position performs unexpectedly, Engie SA can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Engie SA will offset losses from the drop in Engie SA's long position.| AES Corp vs. Codexis | AES Corp vs. Eastman Chemical | AES Corp vs. CF Industries Holdings | AES Corp vs. Sensient Technologies |
| Engie SA vs. TransAlta Corp | Engie SA vs. Pampa Energia SA | Engie SA vs. Vistra Energy Corp | Engie SA vs. NRG Energy |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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