Correlation Between ENGIE ADR/1 and Engie SA
Can any of the company-specific risk be diversified away by investing in both ENGIE ADR/1 and Engie SA 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 Engie SA 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 Engie SA, you can compare the effects of market volatilities on ENGIE ADR/1 and Engie SA 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 Engie SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENGIE ADR/1 and Engie SA.
Diversification Opportunities for ENGIE ADR/1 and Engie SA
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ENGIE and Engie is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding ENGIE ADR1 EO and Engie SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engie SA 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 Engie SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engie SA has no effect on the direction of ENGIE ADR/1 i.e., ENGIE ADR/1 and Engie SA go up and down completely randomly.
Pair Corralation between ENGIE ADR/1 and Engie SA
Assuming the 90 days trading horizon ENGIE ADR/1 is expected to generate 3.36 times less return on investment than Engie SA. In addition to that, ENGIE ADR/1 is 1.81 times more volatile than Engie SA. It trades about 0.03 of its total potential returns per unit of risk. Engie SA is currently generating about 0.2 per unit of volatility. If you would invest 1,715 in Engie SA on January 13, 2025 and sell it today you would earn a total of 116.00 from holding Engie SA or generate 6.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ENGIE ADR1 EO vs. Engie SA
Performance |
| Timeline |
| ENGIE ADR1 EO |
| Engie SA |
ENGIE ADR/1 and Engie SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ENGIE ADR/1 and Engie SA
The main advantage of trading using opposite ENGIE ADR/1 and Engie SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENGIE ADR/1 position performs unexpectedly, Engie SA 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 Engie SA will offset losses from the drop in Engie SA's long position.| ENGIE ADR/1 vs. Iberdrola SA | ENGIE ADR/1 vs. Enel SpA | ENGIE ADR/1 vs. Enel SpA | ENGIE ADR/1 vs. Dominion Energy |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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