Correlation Between CRYOLIFE and ENTERGY Dusseldorf

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

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

Diversification Opportunities for CRYOLIFE and ENTERGY Dusseldorf

0.89

Correlation Coefficient

CRYOLIFE  ENTERGY Dusseldorf

Very poor diversification

The 3 months correlation between CRYOLIFE and ENTERGY is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding CRYOLIFE and ENTERGY Dusseldorf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENTERGY Dusseldorf and CRYOLIFE 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 CRYOLIFE are associated (or correlated) with ENTERGY Dusseldorf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENTERGY Dusseldorf has no effect on the direction of CRYOLIFE i.e., CRYOLIFE and ENTERGY Dusseldorf go up and down completely randomly.

Pair Corralation between CRYOLIFE and ENTERGY Dusseldorf

Assuming the 90 days trading horizon CRYOLIFE is expected to generate 1.5 times less return on investment than ENTERGY Dusseldorf. But when comparing it to its historical volatility, CRYOLIFE is 1.45 times less risky than ENTERGY Dusseldorf. It trades about 0.16 of its potential returns per unit of risk. ENTERGY Dusseldorf is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  5,700  in ENTERGY Dusseldorf on September 29, 2024 and sell it today you would earn a total of  1,500  from holding ENTERGY Dusseldorf or generate 26.32% return on investment over 90 days.

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

CRYOLIFE  vs.  ENTERGY Dusseldorf

CRYOLIFE

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CRYOLIFE are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain essential indicators, CRYOLIFE exhibited solid returns over the last few months and may actually be approaching a breakup point.

ENTERGY Dusseldorf

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with CRYOLIFE and ENTERGY Dusseldorf

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

The idea behind CRYOLIFE and ENTERGY Dusseldorf 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.