Correlation Between IDACORP and Entergy Texas
Can any of the company-specific risk be diversified away by investing in both IDACORP and Entergy Texas 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 IDACORP and Entergy Texas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IDACORP and Entergy Texas, you can compare the effects of market volatilities on IDACORP and Entergy Texas 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 IDACORP with a short position of Entergy Texas. Check out your portfolio center. Please also check ongoing floating volatility patterns of IDACORP and Entergy Texas.
Diversification Opportunities for IDACORP and Entergy Texas
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IDACORP and Entergy is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding IDACORP and Entergy Texas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entergy Texas and IDACORP 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 IDACORP are associated (or correlated) with Entergy Texas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entergy Texas has no effect on the direction of IDACORP i.e., IDACORP and Entergy Texas go up and down completely randomly.
Pair Corralation between IDACORP and Entergy Texas
Considering the 90-day investment horizon IDACORP is expected to under-perform the Entergy Texas. In addition to that, IDACORP is 1.89 times more volatile than Entergy Texas. It trades about -0.03 of its total potential returns per unit of risk. Entergy Texas is currently generating about 0.15 per unit of volatility. If you would invest 2,311 in Entergy Texas on October 26, 2024 and sell it today you would earn a total of 49.00 from holding Entergy Texas or generate 2.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
IDACORP vs. Entergy Texas
Performance |
| Timeline |
| IDACORP |
| Entergy Texas |
IDACORP and Entergy Texas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IDACORP and Entergy Texas
The main advantage of trading using opposite IDACORP and Entergy Texas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IDACORP position performs unexpectedly, Entergy Texas 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 Texas will offset losses from the drop in Entergy Texas' long position.| IDACORP vs. CMS Energy | IDACORP vs. Pinnacle West Capital | IDACORP vs. Alliant Energy Corp | IDACORP vs. Portland General Electric |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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