Correlation Between Entergy Louisiana and Q2 Holdings

Can any of the company-specific risk be diversified away by investing in both Entergy Louisiana and Q2 Holdings 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 Entergy Louisiana and Q2 Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Entergy Louisiana LLC and Q2 Holdings, you can compare the effects of market volatilities on Entergy Louisiana and Q2 Holdings 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 Entergy Louisiana with a short position of Q2 Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entergy Louisiana and Q2 Holdings.

Diversification Opportunities for Entergy Louisiana and Q2 Holdings

0.17

Correlation Coefficient

Entergy Louisiana  Q2 Holdings

Average diversification

The 3 months correlation between Entergy and QTWO is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Entergy Louisiana LLC and Q2 Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Q2 Holdings and Entergy Louisiana 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 Entergy Louisiana LLC are associated (or correlated) with Q2 Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Q2 Holdings has no effect on the direction of Entergy Louisiana i.e., Entergy Louisiana and Q2 Holdings go up and down completely randomly.

Pair Corralation between Entergy Louisiana and Q2 Holdings

Considering the 90-day investment horizon Entergy Louisiana LLC is expected to generate 0.32 times more return on investment than Q2 Holdings. However, Entergy Louisiana LLC is 3.08 times less risky than Q2 Holdings. It trades about 0.02 of its potential returns per unit of risk. Q2 Holdings is currently generating about -0.11 per unit of risk. If you would invest  2,069  in Entergy Louisiana LLC on December 27, 2024 and sell it today you would earn a total of  18.00  from holding Entergy Louisiana LLC or generate 0.87% return on investment over 90 days.

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

Entergy Louisiana LLC  vs.  Q2 Holdings

Entergy Louisiana LLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Entergy Louisiana LLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Entergy Louisiana is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Q2 Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Q2 Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Entergy Louisiana and Q2 Holdings

The main advantage of trading using opposite Entergy Louisiana and Q2 Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entergy Louisiana position performs unexpectedly, Q2 Holdings 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 Q2 Holdings will offset losses from the drop in Q2 Holdings' long position.

The idea behind Entergy Louisiana LLC and Q2 Holdings 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.