Correlation Between EDP Energias and Engie SA
Can any of the company-specific risk be diversified away by investing in both EDP Energias 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 EDP Energias and Engie SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EDP Energias de and Engie SA ADR, you can compare the effects of market volatilities on EDP Energias 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 EDP Energias with a short position of Engie SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of EDP Energias and Engie SA.
Diversification Opportunities for EDP Energias and Engie SA
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between EDP and Engie is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding EDP Energias de 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 EDP Energias 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 EDP Energias de 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 EDP Energias i.e., EDP Energias and Engie SA go up and down completely randomly.
Pair Corralation between EDP Energias and Engie SA
Assuming the 90 days horizon EDP Energias de is expected to under-perform the Engie SA. In addition to that, EDP Energias is 1.18 times more volatile than Engie SA ADR. It trades about -0.02 of its total potential returns per unit of risk. Engie SA ADR is currently generating about 0.04 per unit of volatility. If you would invest 1,257 in Engie SA ADR on August 30, 2024 and sell it today you would earn a total of 315.00 from holding Engie SA ADR or generate 25.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
EDP Energias de vs. Engie SA ADR
Performance |
| Timeline |
| EDP Energias de |
| Engie SA ADR |
EDP Energias and Engie SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EDP Energias and Engie SA
The main advantage of trading using opposite EDP Energias and Engie SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EDP Energias 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.| EDP Energias vs. American Water Works | EDP Energias vs. Middlesex Water | EDP Energias vs. SJW Group Common | EDP Energias vs. California Water Service |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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