Correlation Between Engie SA and Euroland Corporate
Can any of the company-specific risk be diversified away by investing in both Engie SA and Euroland Corporate 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 SA and Euroland Corporate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Engie SA and Euroland Corporate SA, you can compare the effects of market volatilities on Engie SA and Euroland Corporate 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 SA with a short position of Euroland Corporate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engie SA and Euroland Corporate.
Diversification Opportunities for Engie SA and Euroland Corporate
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Engie and Euroland is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Engie SA and Euroland Corporate SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euroland Corporate and Engie SA 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 SA are associated (or correlated) with Euroland Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euroland Corporate has no effect on the direction of Engie SA i.e., Engie SA and Euroland Corporate go up and down completely randomly.
Pair Corralation between Engie SA and Euroland Corporate
Assuming the 90 days trading horizon Engie SA is expected to generate 4.7 times less return on investment than Euroland Corporate. But when comparing it to its historical volatility, Engie SA is 5.79 times less risky than Euroland Corporate. It trades about 0.03 of its potential returns per unit of risk. Euroland Corporate SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 280.00 in Euroland Corporate SA on August 30, 2024 and sell it today you would earn a total of 2.00 from holding Euroland Corporate SA or generate 0.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 65.92% |
| Values | Daily Returns |
Engie SA vs. Euroland Corporate SA
Performance |
| Timeline |
| Engie SA |
| Euroland Corporate |
Engie SA and Euroland Corporate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Engie SA and Euroland Corporate
The main advantage of trading using opposite Engie SA and Euroland Corporate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engie SA position performs unexpectedly, Euroland Corporate 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 Euroland Corporate will offset losses from the drop in Euroland Corporate's long position.| Engie SA vs. Orange SA | Engie SA vs. Veolia Environnement VE | Engie SA vs. AXA SA | Engie SA vs. TotalEnergies SE |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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