Correlation Between Entergy Louisiana and Origin Materials
Can any of the company-specific risk be diversified away by investing in both Entergy Louisiana and Origin Materials 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 Origin Materials 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 Origin Materials, you can compare the effects of market volatilities on Entergy Louisiana and Origin Materials 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 Origin Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entergy Louisiana and Origin Materials.
Diversification Opportunities for Entergy Louisiana and Origin Materials
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Entergy and Origin is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Entergy Louisiana LLC and Origin Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Materials 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 Origin Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Materials has no effect on the direction of Entergy Louisiana i.e., Entergy Louisiana and Origin Materials go up and down completely randomly.
Pair Corralation between Entergy Louisiana and Origin Materials
Considering the 90-day investment horizon Entergy Louisiana LLC is expected to generate 0.15 times more return on investment than Origin Materials. However, Entergy Louisiana LLC is 6.47 times less risky than Origin Materials. It trades about -0.01 of its potential returns per unit of risk. Origin Materials is currently generating about -0.01 per unit of risk. If you would invest 2,213 in Entergy Louisiana LLC on September 5, 2024 and sell it today you would lose (6.00) from holding Entergy Louisiana LLC or give up 0.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Entergy Louisiana LLC vs. Origin Materials
Performance |
| Timeline |
| Entergy Louisiana LLC |
| Origin Materials |
Entergy Louisiana and Origin Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Entergy Louisiana and Origin Materials
The main advantage of trading using opposite Entergy Louisiana and Origin Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entergy Louisiana position performs unexpectedly, Origin Materials 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 Origin Materials will offset losses from the drop in Origin Materials' long position.| Entergy Louisiana vs. Uber Technologies | Entergy Louisiana vs. JD Sports Fashion | Entergy Louisiana vs. Xponential Fitness | Entergy Louisiana vs. Minerals Technologies |
| Origin Materials vs. Tronox Holdings PLC | Origin Materials vs. Valhi Inc | Origin Materials vs. Lsb Industries | Origin Materials vs. Huntsman |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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