Correlation Between ENGIE ADR/1 and ENGIE Eps

Can any of the company-specific risk be diversified away by investing in both ENGIE ADR/1 and ENGIE Eps 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 ENGIE ADR/1 and ENGIE Eps into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ENGIE ADR1 EO and ENGIE Eps SA, you can compare the effects of market volatilities on ENGIE ADR/1 and ENGIE Eps 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 ENGIE ADR/1 with a short position of ENGIE Eps. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENGIE ADR/1 and ENGIE Eps.

Diversification Opportunities for ENGIE ADR/1 and ENGIE Eps

-0.68

Correlation Coefficient

ENGIE ADR/1  ENGIE Eps

Excellent diversification

The 3 months correlation between ENGIE and ENGIE is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding ENGIE ADR1 EO and ENGIE Eps SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENGIE Eps SA and ENGIE ADR/1 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 ENGIE ADR1 EO are associated (or correlated) with ENGIE Eps. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENGIE Eps SA has no effect on the direction of ENGIE ADR/1 i.e., ENGIE ADR/1 and ENGIE Eps go up and down completely randomly.

Pair Corralation between ENGIE ADR/1 and ENGIE Eps

If you would invest  1,510  in ENGIE ADR1 EO on October 8, 2024 and sell it today you would earn a total of  40.00  from holding ENGIE ADR1 EO or generate 2.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	18.75%
Values	Daily Returns

ENGIE ADR1 EO  vs.  ENGIE Eps SA

ENGIE ADR1 EO

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ENGIE ADR1 EO are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, ENGIE ADR/1 is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ENGIE Eps SA

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days ENGIE Eps SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, ENGIE Eps reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ENGIE ADR/1 and ENGIE Eps

The main advantage of trading using opposite ENGIE ADR/1 and ENGIE Eps positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENGIE ADR/1 position performs unexpectedly, ENGIE Eps 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 Eps will offset losses from the drop in ENGIE Eps' long position.

The idea behind ENGIE ADR1 EO and ENGIE Eps SA 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.