Correlation Between ENGIE ADR/1 and EON SE
Can any of the company-specific risk be diversified away by investing in both ENGIE ADR/1 and EON SE 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 ENGIE ADR/1 and EON SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ENGIE ADR1 EO and EON SE, you can compare the effects of market volatilities on ENGIE ADR/1 and EON SE 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 ENGIE ADR/1 with a short position of EON SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENGIE ADR/1 and EON SE.
Diversification Opportunities for ENGIE ADR/1 and EON SE
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ENGIE and EON is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding ENGIE ADR1 EO and EON SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EON SE and ENGIE ADR/1 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 ENGIE ADR1 EO are associated (or correlated) with EON SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EON SE has no effect on the direction of ENGIE ADR/1 i.e., ENGIE ADR/1 and EON SE go up and down completely randomly.
Pair Corralation between ENGIE ADR/1 and EON SE
Assuming the 90 days trading horizon ENGIE ADR1 EO is expected to under-perform the EON SE. But the stock apears to be less risky and, when comparing its historical volatility, ENGIE ADR1 EO is 1.73 times less risky than EON SE. The stock trades about -0.21 of its potential returns per unit of risk. The EON SE is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 1,244 in EON SE on September 1, 2024 and sell it today you would lose (28.00) from holding EON SE or give up 2.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ENGIE ADR1 EO vs. EON SE
Performance |
| Timeline |
| ENGIE ADR1 EO |
| EON SE |
ENGIE ADR/1 and EON SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ENGIE ADR/1 and EON SE
The main advantage of trading using opposite ENGIE ADR/1 and EON SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENGIE ADR/1 position performs unexpectedly, EON SE 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 EON SE will offset losses from the drop in EON SE's long position.| ENGIE ADR/1 vs. BYD ELECTRONIC | ENGIE ADR/1 vs. AOI Electronics Co | ENGIE ADR/1 vs. INTERSHOP Communications Aktiengesellschaft | ENGIE ADR/1 vs. Taiwan Semiconductor Manufacturing |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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