Correlation Between Maiden Holdings and Entergy New

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

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

Diversification Opportunities for Maiden Holdings and Entergy New

0.82

Correlation Coefficient

Maiden Holdings  Entergy New

Very poor diversification

The 3 months correlation between Maiden and Entergy is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Maiden Holdings 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 Maiden Holdings 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 Maiden Holdings 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 Maiden Holdings i.e., Maiden Holdings and Entergy New go up and down completely randomly.

Pair Corralation between Maiden Holdings and Entergy New

Given the investment horizon of 90 days Maiden Holdings is expected to under-perform the Entergy New. In addition to that, Maiden Holdings is 3.5 times more volatile than Entergy New Orleans. It trades about -0.19 of its total potential returns per unit of risk. Entergy New Orleans is currently generating about -0.37 per unit of volatility. If you would invest  2,235  in Entergy New Orleans on October 8, 2024 and sell it today you would lose (105.00) from holding Entergy New Orleans or give up 4.7% of portfolio value over 90 days.

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

Maiden Holdings  vs.  Entergy New Orleans

Maiden Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maiden Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Entergy New Orleans

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Entergy New Orleans has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

Pair Trading with Maiden Holdings and Entergy New

The main advantage of trading using opposite Maiden Holdings and Entergy New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maiden Holdings 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 Maiden Holdings 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.