Correlation Between AES and Engie SA

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

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

Diversification Opportunities for AES and Engie SA

0.81

Correlation Coefficient

AES  Engie SA

Very poor diversification

The 3 months correlation between AES and Engie is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding The AES 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 AES 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 The AES 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 AES i.e., AES and Engie SA go up and down completely randomly.

Pair Corralation between AES and Engie SA

Considering the 90-day investment horizon The AES is expected to under-perform the Engie SA. In addition to that, AES is 2.97 times more volatile than Engie SA ADR. It trades about -0.13 of its total potential returns per unit of risk. Engie SA ADR is currently generating about -0.16 per unit of volatility. If you would invest  1,734  in Engie SA ADR on August 31, 2024 and sell it today you would lose (160.00) from holding Engie SA ADR or give up 9.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

The AES  vs.  Engie SA ADR

AES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The AES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Engie SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Engie SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with AES and Engie SA

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

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.