Correlation Between ENGIE ADR/1 and National Grid

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Can any of the company-specific risk be diversified away by investing in both ENGIE ADR/1 and National Grid 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 ENGIE ADR/1 and National Grid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ENGIE ADR1 EO and National Grid PLC, you can compare the effects of market volatilities on ENGIE ADR/1 and National Grid 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 ENGIE ADR/1 with a short position of National Grid. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENGIE ADR/1 and National Grid.

Diversification Opportunities for ENGIE ADR/1 and National Grid

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between ENGIE and National is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ENGIE ADR1 EO and National Grid PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Grid PLC and ENGIE ADR/1 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 ENGIE ADR1 EO are associated (or correlated) with National Grid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Grid PLC has no effect on the direction of ENGIE ADR/1 i.e., ENGIE ADR/1 and National Grid go up and down completely randomly.

Pair Corralation between ENGIE ADR/1 and National Grid

If you would invest (100.00) in ENGIE ADR1 EO on October 1, 2024 and sell it today you would earn a total of  100.00  from holding ENGIE ADR1 EO or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

ENGIE ADR1 EO  vs.  National Grid PLC

 Performance 
       Timeline  
ENGIE ADR1 EO 

Risk-Adjusted Performance

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Over the last 90 days ENGIE ADR1 EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, ENGIE ADR/1 is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
National Grid PLC 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days National Grid PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

ENGIE ADR/1 and National Grid Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ENGIE ADR/1 and National Grid

The main advantage of trading using opposite ENGIE ADR/1 and National Grid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENGIE ADR/1 position performs unexpectedly, National Grid 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 National Grid will offset losses from the drop in National Grid's long position.
The idea behind ENGIE ADR1 EO and National Grid PLC 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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