Correlation Between Entergy Mississippi and Entergy Louisiana
Can any of the company-specific risk be diversified away by investing in both Entergy Mississippi and Entergy Louisiana 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 Mississippi and Entergy Louisiana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Entergy Mississippi LLC and Entergy Louisiana LLC, you can compare the effects of market volatilities on Entergy Mississippi and Entergy Louisiana 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 Mississippi with a short position of Entergy Louisiana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entergy Mississippi and Entergy Louisiana.
Diversification Opportunities for Entergy Mississippi and Entergy Louisiana
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Entergy and Entergy is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Entergy Mississippi LLC and Entergy Louisiana LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entergy Louisiana LLC and Entergy Mississippi 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 Mississippi LLC are associated (or correlated) with Entergy Louisiana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entergy Louisiana LLC has no effect on the direction of Entergy Mississippi i.e., Entergy Mississippi and Entergy Louisiana go up and down completely randomly.
Pair Corralation between Entergy Mississippi and Entergy Louisiana
Considering the 90-day investment horizon Entergy Mississippi LLC is expected to generate 0.98 times more return on investment than Entergy Louisiana. However, Entergy Mississippi LLC is 1.02 times less risky than Entergy Louisiana. It trades about -0.16 of its potential returns per unit of risk. Entergy Louisiana LLC is currently generating about -0.16 per unit of risk. If you would invest 2,276 in Entergy Mississippi LLC on August 31, 2024 and sell it today you would lose (65.00) from holding Entergy Mississippi LLC or give up 2.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Entergy Mississippi LLC vs. Entergy Louisiana LLC
Performance |
| Timeline |
| Entergy Mississippi LLC |
| Entergy Louisiana LLC |
Entergy Mississippi and Entergy Louisiana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Entergy Mississippi and Entergy Louisiana
The main advantage of trading using opposite Entergy Mississippi and Entergy Louisiana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entergy Mississippi position performs unexpectedly, Entergy Louisiana 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 Louisiana will offset losses from the drop in Entergy Louisiana's long position.| Entergy Mississippi vs. Entergy Arkansas LLC | Entergy Mississippi vs. Entergy New Orleans | Entergy Mississippi vs. Entergy Louisiana LLC | Entergy Mississippi vs. Entergy New Orleans |
| Entergy Louisiana vs. The Coca Cola | Entergy Louisiana vs. Celsius Holdings | Entergy Louisiana vs. SNDL Inc | Entergy Louisiana vs. Brandywine Realty Trust |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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