Correlation Between OGE Energy and Entergy

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

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

Diversification Opportunities for OGE Energy and Entergy

0.56

Correlation Coefficient

OGE Energy  Entergy

Very weak diversification

The 3 months correlation between OGE and Entergy is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding OGE Energy and Entergy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entergy and OGE 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 OGE Energy are associated (or correlated) with Entergy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entergy has no effect on the direction of OGE Energy i.e., OGE Energy and Entergy go up and down completely randomly.

Pair Corralation between OGE Energy and Entergy

Considering the 90-day investment horizon OGE Energy is expected to generate 36.93 times less return on investment than Entergy. In addition to that, OGE Energy is 1.06 times more volatile than Entergy. It trades about 0.0 of its total potential returns per unit of risk. Entergy is currently generating about 0.17 per unit of volatility. If you would invest  7,625  in Entergy on October 26, 2024 and sell it today you would earn a total of  634.00  from holding Entergy or generate 8.31% return on investment over 90 days.

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

OGE Energy  vs.  Entergy

OGE Energy

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in OGE Energy are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, OGE Energy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Entergy

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Entergy are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Entergy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OGE Energy and Entergy

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

The idea behind OGE Energy and Entergy 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .