Correlation Between Entergy New and Reinsurance Group
Can any of the company-specific risk be diversified away by investing in both Entergy New and Reinsurance Group 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 Reinsurance Group 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 Reinsurance Group of, you can compare the effects of market volatilities on Entergy New and Reinsurance Group 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 Reinsurance Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entergy New and Reinsurance Group.
Diversification Opportunities for Entergy New and Reinsurance Group
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Entergy and Reinsurance is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Entergy New Orleans and Reinsurance Group of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reinsurance Group 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 Reinsurance Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reinsurance Group has no effect on the direction of Entergy New i.e., Entergy New and Reinsurance Group go up and down completely randomly.
Pair Corralation between Entergy New and Reinsurance Group
Considering the 90-day investment horizon Entergy New Orleans is expected to under-perform the Reinsurance Group. In addition to that, Entergy New is 5.78 times more volatile than Reinsurance Group of. It trades about -0.03 of its total potential returns per unit of risk. Reinsurance Group of is currently generating about 0.05 per unit of volatility. If you would invest 2,495 in Reinsurance Group of on August 31, 2024 and sell it today you would earn a total of 5.00 from holding Reinsurance Group of or generate 0.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Entergy New Orleans vs. Reinsurance Group of
Performance |
| Timeline |
| Entergy New Orleans |
| Reinsurance Group |
Entergy New and Reinsurance Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Entergy New and Reinsurance Group
The main advantage of trading using opposite Entergy New and Reinsurance Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entergy New position performs unexpectedly, Reinsurance Group 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 Reinsurance Group will offset losses from the drop in Reinsurance Group'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 |
| Reinsurance Group vs. Southern Co | Reinsurance Group vs. Stifel Financial | Reinsurance Group vs. Entergy New Orleans | Reinsurance Group vs. Entergy Arkansas LLC |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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