Correlation Between NRG Energy and European Wax
Can any of the company-specific risk be diversified away by investing in both NRG Energy and European Wax 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 European Wax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NRG Energy and European Wax Center, you can compare the effects of market volatilities on NRG Energy and European Wax 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 European Wax. Check out your portfolio center. Please also check ongoing floating volatility patterns of NRG Energy and European Wax.
Diversification Opportunities for NRG Energy and European Wax
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NRG and European is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding NRG Energy and European Wax Center in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Wax Center 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 European Wax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Wax Center has no effect on the direction of NRG Energy i.e., NRG Energy and European Wax go up and down completely randomly.
Pair Corralation between NRG Energy and European Wax
Considering the 90-day investment horizon NRG Energy is expected to generate 0.57 times more return on investment than European Wax. However, NRG Energy is 1.76 times less risky than European Wax. It trades about 0.13 of its potential returns per unit of risk. European Wax Center is currently generating about -0.04 per unit of risk. If you would invest 3,039 in NRG Energy on October 13, 2024 and sell it today you would earn a total of 6,900 from holding NRG Energy or generate 227.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NRG Energy vs. European Wax Center
Performance |
| Timeline |
| NRG Energy |
| European Wax Center |
NRG Energy and European Wax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NRG Energy and European Wax
The main advantage of trading using opposite NRG Energy and European Wax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NRG Energy position performs unexpectedly, European Wax 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 European Wax will offset losses from the drop in European Wax's long position.| NRG Energy vs. TransAlta Corp | NRG Energy vs. Kenon Holdings | NRG Energy vs. Pampa Energia SA | NRG Energy vs. AGL Energy |
| European Wax vs. Edgewell Personal Care | European Wax vs. Inter Parfums | European Wax vs. Henkel AG Co | European Wax vs. Mannatech Incorporated |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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