Correlation Between Genpact and Entergy New

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

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

Diversification Opportunities for Genpact and Entergy New

-0.66

Correlation Coefficient

Genpact  Entergy New

Excellent diversification

The 3 months correlation between Genpact and Entergy is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited 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 Genpact 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 Genpact Limited 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 Genpact i.e., Genpact and Entergy New go up and down completely randomly.

Pair Corralation between Genpact and Entergy New

Taking into account the 90-day investment horizon Genpact Limited is expected to generate 2.25 times more return on investment than Entergy New. However, Genpact is 2.25 times more volatile than Entergy New Orleans. It trades about 0.1 of its potential returns per unit of risk. Entergy New Orleans is currently generating about -0.18 per unit of risk. If you would invest  3,908  in Genpact Limited on September 28, 2024 and sell it today you would earn a total of  406.00  from holding Genpact Limited or generate 10.39% return on investment over 90 days.

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

Genpact Limited  vs.  Entergy New Orleans

Genpact Limited

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Genpact Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Genpact may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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. In spite of latest inconsistent performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Genpact and Entergy New

The main advantage of trading using opposite Genpact and Entergy New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genpact 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 Genpact Limited 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.