Correlation Between Commerce Energy and Engie SA

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

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

Diversification Opportunities for Commerce Energy and Engie SA

0.0

Correlation Coefficient

Commerce Energy  Engie SA

Pay attention - limited upside

The 3 months correlation between Commerce and Engie is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Commerce Energy Group 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 Commerce 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 Commerce Energy Group 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 Commerce Energy i.e., Commerce Energy and Engie SA go up and down completely randomly.

Pair Corralation between Commerce Energy and Engie SA

If you would invest  1,586  in Engie SA ADR on December 29, 2024 and sell it today you would earn a total of  371.00  from holding Engie SA ADR or generate 23.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Commerce Energy Group  vs.  Engie SA ADR

Commerce Energy Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Commerce Energy Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Commerce Energy is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

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 24 (%) 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 Commerce Energy and Engie SA

The main advantage of trading using opposite Commerce Energy and Engie SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commerce Energy 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 Commerce Energy Group 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.