Correlation Between NorthWestern and Engie SA
Can any of the company-specific risk be diversified away by investing in both NorthWestern and Engie SA 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 NorthWestern and Engie SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NorthWestern and Engie SA ADR, you can compare the effects of market volatilities on NorthWestern and Engie SA 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 NorthWestern with a short position of Engie SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorthWestern and Engie SA.
Diversification Opportunities for NorthWestern and Engie SA
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between NorthWestern and Engie is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding NorthWestern and Engie SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engie SA ADR and NorthWestern 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 NorthWestern are associated (or correlated) with Engie SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engie SA ADR has no effect on the direction of NorthWestern i.e., NorthWestern and Engie SA go up and down completely randomly.
Pair Corralation between NorthWestern and Engie SA
Considering the 90-day investment horizon NorthWestern is expected to generate 1.49 times more return on investment than Engie SA. However, NorthWestern is 1.49 times more volatile than Engie SA ADR. It trades about 0.11 of its potential returns per unit of risk. Engie SA ADR is currently generating about -0.25 per unit of risk. If you would invest 5,346 in NorthWestern on September 1, 2024 and sell it today you would earn a total of 178.00 from holding NorthWestern or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NorthWestern vs. Engie SA ADR
Performance |
| Timeline |
| NorthWestern |
| Engie SA ADR |
NorthWestern and Engie SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorthWestern and Engie SA
The main advantage of trading using opposite NorthWestern and Engie SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorthWestern position performs unexpectedly, Engie SA 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 Engie SA will offset losses from the drop in Engie SA's long position.| NorthWestern vs. Allete Inc | NorthWestern vs. Black Hills | NorthWestern vs. Otter Tail | NorthWestern vs. Avista |
| Engie SA vs. Nextera Energy | Engie SA vs. Consumers Energy | Engie SA vs. Duke Energy | Engie SA vs. Centrais Electricas Brasileiras |
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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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