Correlation Between Euronet Worldwide and Entergy New

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

By analyzing existing cross correlation between Euronet Worldwide and Entergy New Orleans, you can compare the effects of market volatilities on Euronet Worldwide and Entergy New 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 Euronet Worldwide with a short position of Entergy New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Euronet Worldwide and Entergy New.

Diversification Opportunities for Euronet Worldwide and Entergy New

0.33

Correlation Coefficient

Euronet Worldwide  Entergy New

Weak diversification

The 3 months correlation between Euronet and Entergy is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Euronet Worldwide and Entergy New Orleans in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entergy New Orleans and Euronet Worldwide 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 Euronet Worldwide are associated (or correlated) with Entergy New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entergy New Orleans has no effect on the direction of Euronet Worldwide i.e., Euronet Worldwide and Entergy New go up and down completely randomly.

Pair Corralation between Euronet Worldwide and Entergy New

Given the investment horizon of 90 days Euronet Worldwide is expected to under-perform the Entergy New. In addition to that, Euronet Worldwide is 2.44 times more volatile than Entergy New Orleans. It trades about -0.01 of its total potential returns per unit of risk. Entergy New Orleans is currently generating about -0.01 per unit of volatility. If you would invest  2,291  in Entergy New Orleans on November 27, 2024 and sell it today you would lose (20.00) from holding Entergy New Orleans or give up 0.87% of portfolio value over 90 days.

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

Euronet Worldwide  vs.  Entergy New Orleans

Euronet Worldwide

Risk-Adjusted Performance

Very Weak

Over the last 90 days Euronet Worldwide has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Euronet Worldwide is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Entergy New Orleans

Risk-Adjusted Performance

Very Weak

Over the last 90 days Entergy New Orleans has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Entergy New is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Euronet Worldwide and Entergy New

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

The idea behind Euronet Worldwide and Entergy New Orleans 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..