Correlation Between Korea Electric and Entergy Texas
Can any of the company-specific risk be diversified away by investing in both Korea Electric 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 Korea Electric and Entergy Texas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Electric Power and Entergy Texas, you can compare the effects of market volatilities on Korea Electric 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 Korea Electric with a short position of Entergy Texas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Electric and Entergy Texas.
Diversification Opportunities for Korea Electric and Entergy Texas
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and Entergy is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Korea Electric Power and Entergy Texas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entergy Texas and Korea Electric 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 Korea Electric Power 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 Korea Electric i.e., Korea Electric and Entergy Texas go up and down completely randomly.
Pair Corralation between Korea Electric and Entergy Texas
Considering the 90-day investment horizon Korea Electric Power is expected to generate 2.99 times more return on investment than Entergy Texas. However, Korea Electric is 2.99 times more volatile than Entergy Texas. It trades about 0.1 of its potential returns per unit of risk. Entergy Texas is currently generating about 0.12 per unit of risk. If you would invest 819.00 in Korea Electric Power on August 27, 2024 and sell it today you would earn a total of 32.00 from holding Korea Electric Power or generate 3.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Electric Power vs. Entergy Texas
Performance |
| Timeline |
| Korea Electric Power |
| Entergy Texas |
Korea Electric and Entergy Texas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Electric and Entergy Texas
The main advantage of trading using opposite Korea Electric and Entergy Texas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Electric 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.| Korea Electric vs. Dominion Energy | Korea Electric vs. Consolidated Edison | Korea Electric vs. Eversource Energy | Korea Electric vs. FirstEnergy |
| Entergy Texas vs. Duke Energy | Entergy Texas vs. Spire Inc | Entergy Texas vs. CMS Energy | Entergy Texas vs. Aquagold International |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |