Correlation Between Spring Valley and Entergy New
Can any of the company-specific risk be diversified away by investing in both Spring Valley and Entergy New 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 Spring Valley and Entergy New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spring Valley Acquisition and Entergy New Orleans, you can compare the effects of market volatilities on Spring Valley and Entergy New 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 Spring Valley with a short position of Entergy New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spring Valley and Entergy New.
Diversification Opportunities for Spring Valley and Entergy New
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Spring and Entergy is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Spring Valley Acquisition and Entergy New Orleans in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entergy New Orleans and Spring Valley 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 Spring Valley Acquisition are associated (or correlated) with Entergy New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entergy New Orleans has no effect on the direction of Spring Valley i.e., Spring Valley and Entergy New go up and down completely randomly.
Pair Corralation between Spring Valley and Entergy New
Assuming the 90 days horizon Spring Valley Acquisition is expected to generate 10.23 times more return on investment than Entergy New. However, Spring Valley is 10.23 times more volatile than Entergy New Orleans. It trades about 0.07 of its potential returns per unit of risk. Entergy New Orleans is currently generating about -0.05 per unit of risk. If you would invest 6.19 in Spring Valley Acquisition on August 24, 2024 and sell it today you would earn a total of 0.21 from holding Spring Valley Acquisition or generate 3.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 65.22% |
| Values | Daily Returns |
Spring Valley Acquisition vs. Entergy New Orleans
Performance |
| Timeline |
| Spring Valley Acquisition |
| Entergy New Orleans |
Spring Valley and Entergy New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spring Valley and Entergy New
The main advantage of trading using opposite Spring Valley and Entergy New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spring Valley position performs unexpectedly, Entergy New 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 New will offset losses from the drop in Entergy New's long position.| Spring Valley vs. Toro Co | Spring Valley vs. WiMi Hologram Cloud | Spring Valley vs. Microbot Medical | Spring Valley vs. Weibo Corp |
| Entergy New vs. Entergy New Orleans | Entergy New vs. Entergy Arkansas LLC | Entergy New vs. Entergy Mississippi LLC | Entergy New vs. Entergy Louisiana LLC |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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