Correlation Between Entergy Arkansas and Stifel Financial
Can any of the company-specific risk be diversified away by investing in both Entergy Arkansas and Stifel Financial 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 Arkansas and Stifel Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Entergy Arkansas LLC and Stifel Financial, you can compare the effects of market volatilities on Entergy Arkansas and Stifel Financial 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 Arkansas with a short position of Stifel Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entergy Arkansas and Stifel Financial.
Diversification Opportunities for Entergy Arkansas and Stifel Financial
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Entergy and Stifel is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Entergy Arkansas LLC and Stifel Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stifel Financial and Entergy Arkansas 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 Arkansas LLC are associated (or correlated) with Stifel Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stifel Financial has no effect on the direction of Entergy Arkansas i.e., Entergy Arkansas and Stifel Financial go up and down completely randomly.
Pair Corralation between Entergy Arkansas and Stifel Financial
Considering the 90-day investment horizon Entergy Arkansas LLC is expected to generate 0.78 times more return on investment than Stifel Financial. However, Entergy Arkansas LLC is 1.28 times less risky than Stifel Financial. It trades about 0.1 of its potential returns per unit of risk. Stifel Financial is currently generating about -0.11 per unit of risk. If you would invest 2,292 in Entergy Arkansas LLC on July 15, 2024 and sell it today you would earn a total of 22.00 from holding Entergy Arkansas LLC or generate 0.96% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Entergy Arkansas LLC vs. Stifel Financial
Performance |
Timeline |
Entergy Arkansas LLC |
Stifel Financial |
Entergy Arkansas and Stifel Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Entergy Arkansas and Stifel Financial
The main advantage of trading using opposite Entergy Arkansas and Stifel Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entergy Arkansas position performs unexpectedly, Stifel Financial 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 Stifel Financial will offset losses from the drop in Stifel Financial's long position.Entergy Arkansas vs. CMS Energy Corp | Entergy Arkansas vs. American Financial Group | Entergy Arkansas vs. Argo Group 65 | Entergy Arkansas vs. Aegon Funding |
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Check out your portfolio center.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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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