Correlation Between Engie SA and Electricit
Can any of the company-specific risk be diversified away by investing in both Engie SA and Electricit 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 Electricit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Engie SA ADR and Electricit De France, you can compare the effects of market volatilities on Engie SA and Electricit 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 Electricit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engie SA and Electricit.
Diversification Opportunities for Engie SA and Electricit
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Engie and Electricit is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Engie SA ADR and Electricit De France in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electricit De France 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 ADR are associated (or correlated) with Electricit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electricit De France has no effect on the direction of Engie SA i.e., Engie SA and Electricit go up and down completely randomly.
Pair Corralation between Engie SA and Electricit
If you would invest 1,286 in Electricit De France on September 2, 2024 and sell it today you would earn a total of 0.00 from holding Electricit De France or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 0.79% |
| Values | Daily Returns |
Engie SA ADR vs. Electricit De France
Performance |
| Timeline |
| Engie SA ADR |
| Electricit De France |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Engie SA and Electricit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Engie SA and Electricit
The main advantage of trading using opposite Engie SA and Electricit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engie SA position performs unexpectedly, Electricit 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 Electricit will offset losses from the drop in Electricit's long position.The idea behind Engie SA ADR and Electricit De France pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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