Correlation Between Entergy New and American Financial
Can any of the company-specific risk be diversified away by investing in both Entergy New and American Financial 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 New and American Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Entergy New Orleans and American Financial Group, you can compare the effects of market volatilities on Entergy New and American Financial 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 New with a short position of American Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entergy New and American Financial.
Diversification Opportunities for Entergy New and American Financial
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Entergy and American is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Entergy New Orleans and American Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Financial and Entergy New 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 New Orleans are associated (or correlated) with American Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Financial has no effect on the direction of Entergy New i.e., Entergy New and American Financial go up and down completely randomly.
Pair Corralation between Entergy New and American Financial
Considering the 90-day investment horizon Entergy New Orleans is expected to generate 1.16 times more return on investment than American Financial. However, Entergy New is 1.16 times more volatile than American Financial Group. It trades about -0.1 of its potential returns per unit of risk. American Financial Group is currently generating about -0.12 per unit of risk. If you would invest 2,363 in Entergy New Orleans on August 27, 2024 and sell it today you would lose (64.00) from holding Entergy New Orleans or give up 2.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Entergy New Orleans vs. American Financial Group
Performance |
| Timeline |
| Entergy New Orleans |
| American Financial |
Entergy New and American Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Entergy New and American Financial
The main advantage of trading using opposite Entergy New and American Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entergy New position performs unexpectedly, American Financial 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 American Financial will offset losses from the drop in American Financial's long position.| Entergy New vs. Entergy New Orleans | Entergy New vs. Entergy Arkansas LLC | Entergy New vs. Entergy Mississippi LLC | Entergy New vs. Entergy Louisiana LLC |
| American Financial vs. American Financial Group | American Financial vs. American Financial Group | American Financial vs. American Financial Group | American Financial vs. Reinsurance Group of |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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