Correlation Between NRG Energy and Diamond Estates
Can any of the company-specific risk be diversified away by investing in both NRG Energy and Diamond Estates 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 NRG Energy and Diamond Estates into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NRG Energy and Diamond Estates Wines, you can compare the effects of market volatilities on NRG Energy and Diamond Estates 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 NRG Energy with a short position of Diamond Estates. Check out your portfolio center. Please also check ongoing floating volatility patterns of NRG Energy and Diamond Estates.
Diversification Opportunities for NRG Energy and Diamond Estates
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NRG and Diamond is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NRG Energy and Diamond Estates Wines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Estates Wines and NRG Energy 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 NRG Energy are associated (or correlated) with Diamond Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Estates Wines has no effect on the direction of NRG Energy i.e., NRG Energy and Diamond Estates go up and down completely randomly.
Pair Corralation between NRG Energy and Diamond Estates
If you would invest 8,925 in NRG Energy on October 20, 2024 and sell it today you would earn a total of 1,526 from holding NRG Energy or generate 17.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
NRG Energy vs. Diamond Estates Wines
Performance |
| Timeline |
| NRG Energy |
| Diamond Estates Wines |
NRG Energy and Diamond Estates Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NRG Energy and Diamond Estates
The main advantage of trading using opposite NRG Energy and Diamond Estates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NRG Energy position performs unexpectedly, Diamond Estates 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 Diamond Estates will offset losses from the drop in Diamond Estates' long position.| NRG Energy vs. TransAlta Corp | NRG Energy vs. Kenon Holdings | NRG Energy vs. Pampa Energia SA | NRG Energy vs. AGL 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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