Correlation Between Talen Energy and Entergy
Can any of the company-specific risk be diversified away by investing in both Talen 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 Talen Energy and Entergy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Talen Energy and Entergy, you can compare the effects of market volatilities on Talen 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 Talen Energy with a short position of Entergy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talen Energy and Entergy.
Diversification Opportunities for Talen Energy and Entergy
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Talen and Entergy is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Talen Energy and Entergy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entergy and Talen 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 Talen 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 Talen Energy i.e., Talen Energy and Entergy go up and down completely randomly.
Pair Corralation between Talen Energy and Entergy
Considering the 90-day investment horizon Talen Energy is expected to generate 3.68 times more return on investment than Entergy. However, Talen Energy is 3.68 times more volatile than Entergy. It trades about 0.05 of its potential returns per unit of risk. Entergy is currently generating about 0.05 per unit of risk. If you would invest 23,495 in Talen Energy on November 18, 2024 and sell it today you would earn a total of 659.00 from holding Talen Energy or generate 2.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Talen Energy vs. Entergy
Performance |
| Timeline |
| Talen Energy |
| Entergy |
Talen Energy and Entergy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Talen Energy and Entergy
The main advantage of trading using opposite Talen Energy and Entergy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Talen 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.| Talen Energy vs. Corsair Gaming | Talen Energy vs. Sphere Entertainment Co | Talen Energy vs. Iridium Communications | Talen Energy vs. Air Lease |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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