Correlation Between Engie Brasil and Entergy
Can any of the company-specific risk be diversified away by investing in both Engie Brasil and Entergy 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 Engie Brasil and Entergy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Engie Brasil Energia and Entergy, you can compare the effects of market volatilities on Engie Brasil and Entergy 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 Engie Brasil with a short position of Entergy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engie Brasil and Entergy.
Diversification Opportunities for Engie Brasil and Entergy
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Engie and Entergy is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Engie Brasil Energia and Entergy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entergy and Engie Brasil 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 Engie Brasil Energia are associated (or correlated) with Entergy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entergy has no effect on the direction of Engie Brasil i.e., Engie Brasil and Entergy go up and down completely randomly.
Pair Corralation between Engie Brasil and Entergy
Assuming the 90 days horizon Engie Brasil Energia is expected to generate 0.99 times more return on investment than Entergy. However, Engie Brasil Energia is 1.01 times less risky than Entergy. It trades about 0.4 of its potential returns per unit of risk. Entergy is currently generating about 0.17 per unit of risk. If you would invest 567.00 in Engie Brasil Energia on November 4, 2024 and sell it today you would earn a total of 83.00 from holding Engie Brasil Energia or generate 14.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Engie Brasil Energia vs. Entergy
Performance |
| Timeline |
| Engie Brasil Energia |
| Entergy |
Engie Brasil and Entergy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Engie Brasil and Entergy
The main advantage of trading using opposite Engie Brasil and Entergy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engie Brasil position performs unexpectedly, Entergy 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 will offset losses from the drop in Entergy's long position.| Engie Brasil vs. Red Electrica Corporacion | Engie Brasil vs. Centrais Eltricas Brasileiras | Engie Brasil vs. Centrais Electricas Brasileiras | Engie Brasil vs. Enel Chile SA |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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