Correlation Between Engie SA and EuroSite Power
Can any of the company-specific risk be diversified away by investing in both Engie SA and EuroSite 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 Engie SA and EuroSite Power 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 EuroSite Power, you can compare the effects of market volatilities on Engie SA and EuroSite 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 Engie SA with a short position of EuroSite Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engie SA and EuroSite Power.
Diversification Opportunities for Engie SA and EuroSite Power
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Engie and EuroSite is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Engie SA ADR and EuroSite Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EuroSite Power 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 EuroSite Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EuroSite Power has no effect on the direction of Engie SA i.e., Engie SA and EuroSite Power go up and down completely randomly.
Pair Corralation between Engie SA and EuroSite Power
Assuming the 90 days horizon Engie SA is expected to generate 17.77 times less return on investment than EuroSite Power. But when comparing it to its historical volatility, Engie SA ADR is 9.22 times less risky than EuroSite Power. It trades about 0.03 of its potential returns per unit of risk. EuroSite Power is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4.00 in EuroSite Power on September 12, 2024 and sell it today you would earn a total of 1.00 from holding EuroSite Power or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Engie SA ADR vs. EuroSite Power
Performance |
| Timeline |
| Engie SA ADR |
| EuroSite Power |
Engie SA and EuroSite Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Engie SA and EuroSite Power
The main advantage of trading using opposite Engie SA and EuroSite Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engie SA position performs unexpectedly, EuroSite 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 EuroSite Power will offset losses from the drop in EuroSite Power's long position.The idea behind Engie SA ADR and EuroSite Power 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.| EuroSite Power vs. Atco | EuroSite Power vs. Canadian Utilities Limited | EuroSite Power vs. Engie SA ADR | EuroSite Power vs. The AES |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| CEOs Directory Screen CEOs from public companies around the world |