Correlation Between Atco and Engie SA

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

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

Diversification Opportunities for Atco and Engie SA

0.73

Correlation Coefficient

Atco  Engie SA

Poor diversification

The 3 months correlation between Atco and Engie is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Atco 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 Atco 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 Atco 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 Atco i.e., Atco and Engie SA go up and down completely randomly.

Pair Corralation between Atco and Engie SA

Assuming the 90 days horizon Atco is expected to generate 2.62 times less return on investment than Engie SA. In addition to that, Atco is 1.01 times more volatile than Engie SA ADR. It trades about 0.11 of its total potential returns per unit of risk. Engie SA ADR is currently generating about 0.3 per unit of volatility. If you would invest  1,586  in Engie SA ADR on December 28, 2024 and sell it today you would earn a total of  350.00  from holding Engie SA ADR or generate 22.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Atco  vs.  Engie SA ADR

Atco

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atco are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady essential indicators, Atco may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Engie SA ADR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Engie SA ADR are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, Engie SA showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Atco and Engie SA

The main advantage of trading using opposite Atco and Engie SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atco 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.

The idea behind Atco and Engie SA ADR 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.

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 Managers module to screen money managers from public funds and ETFs managed around the world.