Correlation Between ENGIE Eps and Otis Worldwide

Can any of the company-specific risk be diversified away by investing in both ENGIE Eps and Otis Worldwide 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 ENGIE Eps and Otis Worldwide into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ENGIE Eps SA and Otis Worldwide Corp, you can compare the effects of market volatilities on ENGIE Eps and Otis Worldwide 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 ENGIE Eps with a short position of Otis Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENGIE Eps and Otis Worldwide.

Diversification Opportunities for ENGIE Eps and Otis Worldwide

0.04

Correlation Coefficient

ENGIE Eps  Otis Worldwide

Significant diversification

The 3 months correlation between ENGIE and Otis is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding ENGIE Eps SA and Otis Worldwide Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otis Worldwide Corp and ENGIE Eps 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 ENGIE Eps SA are associated (or correlated) with Otis Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otis Worldwide Corp has no effect on the direction of ENGIE Eps i.e., ENGIE Eps and Otis Worldwide go up and down completely randomly.

Pair Corralation between ENGIE Eps and Otis Worldwide

Assuming the 90 days horizon ENGIE Eps SA is expected to generate 1.53 times more return on investment than Otis Worldwide. However, ENGIE Eps is 1.53 times more volatile than Otis Worldwide Corp. It trades about 0.08 of its potential returns per unit of risk. Otis Worldwide Corp is currently generating about 0.02 per unit of risk. If you would invest  102.00  in ENGIE Eps SA on September 29, 2024 and sell it today you would earn a total of  18.00  from holding ENGIE Eps SA or generate 17.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	92.91%
Values	Daily Returns

ENGIE Eps SA  vs.  Otis Worldwide Corp

ENGIE Eps SA

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days ENGIE Eps SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, ENGIE Eps reported solid returns over the last few months and may actually be approaching a breakup point.

Otis Worldwide Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Otis Worldwide Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Otis Worldwide is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ENGIE Eps and Otis Worldwide

The main advantage of trading using opposite ENGIE Eps and Otis Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENGIE Eps position performs unexpectedly, Otis Worldwide 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 Otis Worldwide will offset losses from the drop in Otis Worldwide's long position.

The idea behind ENGIE Eps SA and Otis Worldwide Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.