Correlation Between Dominion Energy and Engie SA
Can any of the company-specific risk be diversified away by investing in both Dominion Energy 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 Dominion Energy and Engie SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dominion Energy and Engie SA, you can compare the effects of market volatilities on Dominion Energy 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 Dominion Energy with a short position of Engie SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dominion Energy and Engie SA.
Diversification Opportunities for Dominion Energy and Engie SA
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dominion and Engie is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Dominion Energy and Engie SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engie SA and Dominion Energy 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 Dominion Energy 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 has no effect on the direction of Dominion Energy i.e., Dominion Energy and Engie SA go up and down completely randomly.
Pair Corralation between Dominion Energy and Engie SA
Assuming the 90 days horizon Dominion Energy is expected to generate 1.31 times more return on investment than Engie SA. However, Dominion Energy is 1.31 times more volatile than Engie SA. It trades about 0.05 of its potential returns per unit of risk. Engie SA is currently generating about 0.04 per unit of risk. If you would invest 4,528 in Dominion Energy on August 31, 2024 and sell it today you would earn a total of 1,149 from holding Dominion Energy or generate 25.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dominion Energy vs. Engie SA
Performance |
| Timeline |
| Dominion Energy |
| Engie SA |
Dominion Energy and Engie SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dominion Energy and Engie SA
The main advantage of trading using opposite Dominion Energy and Engie SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dominion Energy 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.| Dominion Energy vs. CN MODERN DAIRY | Dominion Energy vs. COMMERCIAL VEHICLE | Dominion Energy vs. NISSIN FOODS HLDGS | Dominion Energy vs. UNITED RENTALS |
| Engie SA vs. ACCSYS TECHPLC EO | Engie SA vs. Lifeway Foods | Engie SA vs. Axcelis Technologies | Engie SA vs. NISSIN FOODS HLDGS |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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