Correlation Between ICF International and Entergy New
Can any of the company-specific risk be diversified away by investing in both ICF International and Entergy New 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 ICF International and Entergy New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ICF International and Entergy New Orleans, you can compare the effects of market volatilities on ICF International and Entergy New 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 ICF International with a short position of Entergy New. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICF International and Entergy New.
Diversification Opportunities for ICF International and Entergy New
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ICF and Entergy is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding ICF International and Entergy New Orleans in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entergy New Orleans and ICF International 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 ICF International are associated (or correlated) with Entergy New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entergy New Orleans has no effect on the direction of ICF International i.e., ICF International and Entergy New go up and down completely randomly.
Pair Corralation between ICF International and Entergy New
Given the investment horizon of 90 days ICF International is expected to under-perform the Entergy New. In addition to that, ICF International is 3.48 times more volatile than Entergy New Orleans. It trades about -0.32 of its total potential returns per unit of risk. Entergy New Orleans is currently generating about -0.15 per unit of volatility. If you would invest 2,397 in Entergy New Orleans on September 4, 2024 and sell it today you would lose (70.99) from holding Entergy New Orleans or give up 2.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ICF International vs. Entergy New Orleans
Performance |
| Timeline |
| ICF International |
| Entergy New Orleans |
ICF International and Entergy New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICF International and Entergy New
The main advantage of trading using opposite ICF International and Entergy New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICF International position performs unexpectedly, Entergy New 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 New will offset losses from the drop in Entergy New's long position.| ICF International vs. Forrester Research | ICF International vs. Huron Consulting Group | ICF International vs. Franklin Covey | ICF International vs. FTI Consulting |
| Entergy New vs. CRA International | Entergy New vs. ICF International | Entergy New vs. Forrester Research | Entergy New vs. Huron Consulting Group |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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