Correlation Between Entergy New and Entergy Louisiana
Can any of the company-specific risk be diversified away by investing in both Entergy New and Entergy Louisiana 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 Entergy Louisiana 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 Entergy Louisiana LLC, you can compare the effects of market volatilities on Entergy New and Entergy Louisiana 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 Entergy Louisiana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entergy New and Entergy Louisiana.
Diversification Opportunities for Entergy New and Entergy Louisiana
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Entergy and Entergy is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Entergy New Orleans and Entergy Louisiana LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entergy Louisiana LLC 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 Entergy Louisiana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entergy Louisiana LLC has no effect on the direction of Entergy New i.e., Entergy New and Entergy Louisiana go up and down completely randomly.
Pair Corralation between Entergy New and Entergy Louisiana
Considering the 90-day investment horizon Entergy New Orleans is expected to under-perform the Entergy Louisiana. In addition to that, Entergy New is 1.27 times more volatile than Entergy Louisiana LLC. It trades about -0.26 of its total potential returns per unit of risk. Entergy Louisiana LLC is currently generating about -0.19 per unit of volatility. If you would invest 2,270 in Entergy Louisiana LLC on August 27, 2024 and sell it today you would lose (68.00) from holding Entergy Louisiana LLC or give up 3.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Entergy New Orleans vs. Entergy Louisiana LLC
Performance |
| Timeline |
| Entergy New Orleans |
| Entergy Louisiana LLC |
Entergy New and Entergy Louisiana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Entergy New and Entergy Louisiana
The main advantage of trading using opposite Entergy New and Entergy Louisiana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entergy New position performs unexpectedly, Entergy Louisiana 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 Entergy Louisiana will offset losses from the drop in Entergy Louisiana's long position.| Entergy New vs. Genpact Limited | Entergy New vs. Broadridge Financial Solutions | Entergy New vs. First Advantage Corp | Entergy New vs. Franklin Covey |
| Entergy Louisiana vs. Teleflex Incorporated | Entergy Louisiana vs. Merit Medical Systems | Entergy Louisiana vs. Air Products and | Entergy Louisiana vs. Stepan Company |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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