Correlation Between Entergy New and TOMI Environmental
Can any of the company-specific risk be diversified away by investing in both Entergy New and TOMI Environmental 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 TOMI Environmental 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 TOMI Environmental Solutions, you can compare the effects of market volatilities on Entergy New and TOMI Environmental 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 TOMI Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entergy New and TOMI Environmental.
Diversification Opportunities for Entergy New and TOMI Environmental
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Entergy and TOMI is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Entergy New Orleans and TOMI Environmental Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOMI Environmental 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 TOMI Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOMI Environmental has no effect on the direction of Entergy New i.e., Entergy New and TOMI Environmental go up and down completely randomly.
Pair Corralation between Entergy New and TOMI Environmental
Considering the 90-day investment horizon Entergy New is expected to generate 6.99 times less return on investment than TOMI Environmental. But when comparing it to its historical volatility, Entergy New Orleans is 7.05 times less risky than TOMI Environmental. It trades about 0.04 of its potential returns per unit of risk. TOMI Environmental Solutions is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 57.00 in TOMI Environmental Solutions on September 4, 2024 and sell it today you would earn a total of 15.00 from holding TOMI Environmental Solutions or generate 26.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Entergy New Orleans vs. TOMI Environmental Solutions
Performance |
| Timeline |
| Entergy New Orleans |
| TOMI Environmental |
Entergy New and TOMI Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Entergy New and TOMI Environmental
The main advantage of trading using opposite Entergy New and TOMI Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entergy New position performs unexpectedly, TOMI Environmental 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 TOMI Environmental will offset losses from the drop in TOMI Environmental's long position.| Entergy New vs. CRA International | Entergy New vs. ICF International | Entergy New vs. Forrester Research | Entergy New vs. Huron Consulting Group |
| TOMI Environmental vs. Decision Diagnostics | TOMI Environmental vs. Kronos Advanced Technologies | TOMI Environmental vs. GeoVax Labs | TOMI Environmental vs. Creative Realities |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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