Correlation Between Entergy Arkansas and Entergy Mississippi
Can any of the company-specific risk be diversified away by investing in both Entergy Arkansas and Entergy Mississippi 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 Entergy Arkansas and Entergy Mississippi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Entergy Arkansas LLC and Entergy Mississippi LLC, you can compare the effects of market volatilities on Entergy Arkansas and Entergy Mississippi 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 Entergy Arkansas with a short position of Entergy Mississippi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entergy Arkansas and Entergy Mississippi.
Diversification Opportunities for Entergy Arkansas and Entergy Mississippi
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Entergy and Entergy is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Entergy Arkansas LLC and Entergy Mississippi LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entergy Mississippi LLC and Entergy Arkansas 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 Entergy Arkansas LLC are associated (or correlated) with Entergy Mississippi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entergy Mississippi LLC has no effect on the direction of Entergy Arkansas i.e., Entergy Arkansas and Entergy Mississippi go up and down completely randomly.
Pair Corralation between Entergy Arkansas and Entergy Mississippi
Considering the 90-day investment horizon Entergy Arkansas LLC is expected to generate 0.97 times more return on investment than Entergy Mississippi. However, Entergy Arkansas LLC is 1.03 times less risky than Entergy Mississippi. It trades about 0.04 of its potential returns per unit of risk. Entergy Mississippi LLC is currently generating about 0.03 per unit of risk. If you would invest 1,940 in Entergy Arkansas LLC on August 24, 2024 and sell it today you would earn a total of 282.00 from holding Entergy Arkansas LLC or generate 14.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Entergy Arkansas LLC vs. Entergy Mississippi LLC
Performance |
| Timeline |
| Entergy Arkansas LLC |
| Entergy Mississippi LLC |
Entergy Arkansas and Entergy Mississippi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Entergy Arkansas and Entergy Mississippi
The main advantage of trading using opposite Entergy Arkansas and Entergy Mississippi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entergy Arkansas position performs unexpectedly, Entergy Mississippi 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 Entergy Mississippi will offset losses from the drop in Entergy Mississippi's long position.| Entergy Arkansas vs. Entergy Mississippi LLC | Entergy Arkansas vs. Entergy New Orleans | Entergy Arkansas vs. Entergy Louisiana LLC | Entergy Arkansas vs. Southern Co |
| Entergy Mississippi vs. Entergy Arkansas LLC | Entergy Mississippi vs. Entergy New Orleans | Entergy Mississippi vs. Entergy Louisiana LLC | Entergy Mississippi vs. Entergy New Orleans |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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