Correlation Between Evergy, and Entergy
Can any of the company-specific risk be diversified away by investing in both Evergy, and Entergy 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 Evergy, and Entergy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evergy, and Entergy, you can compare the effects of market volatilities on Evergy, and Entergy 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 Evergy, with a short position of Entergy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evergy, and Entergy.
Diversification Opportunities for Evergy, and Entergy
Poor diversification
The 3 months correlation between Evergy, and Entergy is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Evergy, and Entergy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entergy and Evergy, 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 Evergy, are associated (or correlated) with Entergy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entergy has no effect on the direction of Evergy, i.e., Evergy, and Entergy go up and down completely randomly.
Pair Corralation between Evergy, and Entergy
Given the investment horizon of 90 days Evergy, is expected to generate 1.6 times less return on investment than Entergy. But when comparing it to its historical volatility, Evergy, is 1.41 times less risky than Entergy. It trades about 0.11 of its potential returns per unit of risk. Entergy is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 9,744 in Entergy on August 26, 2024 and sell it today you would earn a total of 5,362 from holding Entergy or generate 55.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evergy, vs. Entergy
Performance |
| Timeline |
| Evergy, |
| Entergy |
Evergy, and Entergy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evergy, and Entergy
The main advantage of trading using opposite Evergy, and Entergy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evergy, position performs unexpectedly, Entergy 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 will offset losses from the drop in Entergy's long position.| Evergy, vs. Dominion Energy | Evergy, vs. Consolidated Edison | Evergy, vs. Eversource Energy | Evergy, vs. FirstEnergy |
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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