Correlation Between OGE Energy and Entergy
Can any of the company-specific risk be diversified away by investing in both OGE Energy and Entergy 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 OGE Energy and Entergy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OGE Energy and Entergy, you can compare the effects of market volatilities on OGE Energy and Entergy 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 OGE Energy with a short position of Entergy. Check out your portfolio center. Please also check ongoing floating volatility patterns of OGE Energy and Entergy.
Diversification Opportunities for OGE Energy and Entergy
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between OGE and Entergy is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding OGE Energy and Entergy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entergy and OGE 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 OGE Energy are associated (or correlated) with Entergy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entergy has no effect on the direction of OGE Energy i.e., OGE Energy and Entergy go up and down completely randomly.
Pair Corralation between OGE Energy and Entergy
Considering the 90-day investment horizon OGE Energy is expected to generate 1.82 times less return on investment than Entergy. But when comparing it to its historical volatility, OGE Energy is 2.5 times less risky than Entergy. It trades about 0.23 of its potential returns per unit of risk. Entergy is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 13,389 in Entergy on August 23, 2024 and sell it today you would earn a total of 1,766 from holding Entergy or generate 13.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
OGE Energy vs. Entergy
Performance |
| Timeline |
| OGE Energy |
| Entergy |
OGE Energy and Entergy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OGE Energy and Entergy
The main advantage of trading using opposite OGE Energy and Entergy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OGE Energy position performs unexpectedly, Entergy 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 will offset losses from the drop in Entergy's long position.| OGE Energy vs. Alliant Energy Corp | OGE Energy vs. CMS Energy | OGE Energy vs. CenterPoint Energy | OGE Energy vs. Pinnacle West Capital |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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