Correlation Between Entergy Louisiana and Georgia Power
Can any of the company-specific risk be diversified away by investing in both Entergy Louisiana and Georgia Power 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 Louisiana and Georgia Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Entergy Louisiana LLC and Georgia Power Co, you can compare the effects of market volatilities on Entergy Louisiana and Georgia Power 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 Louisiana with a short position of Georgia Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entergy Louisiana and Georgia Power.
Diversification Opportunities for Entergy Louisiana and Georgia Power
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Entergy and Georgia is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Entergy Louisiana LLC and Georgia Power Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Georgia Power and Entergy Louisiana 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 Louisiana LLC are associated (or correlated) with Georgia Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Georgia Power has no effect on the direction of Entergy Louisiana i.e., Entergy Louisiana and Georgia Power go up and down completely randomly.
Pair Corralation between Entergy Louisiana and Georgia Power
Considering the 90-day investment horizon Entergy Louisiana LLC is expected to under-perform the Georgia Power. But the stock apears to be less risky and, when comparing its historical volatility, Entergy Louisiana LLC is 1.0 times less risky than Georgia Power. The stock trades about -0.16 of its potential returns per unit of risk. The Georgia Power Co is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest 2,358 in Georgia Power Co on August 31, 2024 and sell it today you would lose (67.00) from holding Georgia Power Co or give up 2.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Entergy Louisiana LLC vs. Georgia Power Co
Performance |
| Timeline |
| Entergy Louisiana LLC |
| Georgia Power |
Entergy Louisiana and Georgia Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Entergy Louisiana and Georgia Power
The main advantage of trading using opposite Entergy Louisiana and Georgia Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entergy Louisiana position performs unexpectedly, Georgia Power 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 Georgia Power will offset losses from the drop in Georgia Power's long position.| Entergy Louisiana vs. The Coca Cola | Entergy Louisiana vs. Celsius Holdings | Entergy Louisiana vs. SNDL Inc | Entergy Louisiana vs. Brandywine Realty Trust |
| Georgia Power vs. Southern Co | Georgia Power vs. Entergy Arkansas LLC | Georgia Power vs. DTE Energy Co | Georgia Power 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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