Correlation Between Entergy and AES

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

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

Diversification Opportunities for Entergy and AES

0.85

Correlation Coefficient

Entergy  AES

Very poor diversification

The 3 months correlation between Entergy and AES is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Entergy and The AES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AES and Entergy 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 are associated (or correlated) with AES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AES has no effect on the direction of Entergy i.e., Entergy and AES go up and down completely randomly.

Pair Corralation between Entergy and AES

Considering the 90-day investment horizon Entergy is expected to generate 2.02 times less return on investment than AES. But when comparing it to its historical volatility, Entergy is 2.48 times less risky than AES. It trades about 0.08 of its potential returns per unit of risk. The AES is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,257  in The AES on September 10, 2025 and sell it today you would earn a total of  129.00  from holding The AES or generate 10.26% return on investment over 90 days.

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

Entergy  vs.  The AES

Entergy

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Entergy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Entergy is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

AES

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in The AES are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, AES may actually be approaching a critical reversion point that can send shares even higher in January 2026.

Pair Trading with Entergy and AES

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

The idea behind Entergy and The AES 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.