Correlation Between Consolidated Edison and Entergy Mississippi

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

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

Diversification Opportunities for Consolidated Edison and Entergy Mississippi

-0.67

Correlation Coefficient

Consolidated Edison  Entergy Mississippi

Excellent diversification

The 3 months correlation between Consolidated and Entergy is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Edison and Entergy Mississippi LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entergy Mississippi LLC and Consolidated Edison 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 Consolidated Edison are associated (or correlated) with Entergy Mississippi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entergy Mississippi LLC has no effect on the direction of Consolidated Edison i.e., Consolidated Edison and Entergy Mississippi go up and down completely randomly.

Pair Corralation between Consolidated Edison and Entergy Mississippi

Allowing for the 90-day total investment horizon Consolidated Edison is expected to generate 1.21 times more return on investment than Entergy Mississippi. However, Consolidated Edison is 1.21 times more volatile than Entergy Mississippi LLC. It trades about 0.16 of its potential returns per unit of risk. Entergy Mississippi LLC is currently generating about -0.13 per unit of risk. If you would invest  8,718  in Consolidated Edison on February 23, 2024 and sell it today you would earn a total of  895.00  from holding Consolidated Edison or generate 10.27% return on investment over 90 days.

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

Consolidated Edison  vs.  Entergy Mississippi LLC

Consolidated Edison

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Consolidated Edison are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Consolidated Edison may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Entergy Mississippi LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Entergy Mississippi LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Stock's primary indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Consolidated Edison and Entergy Mississippi

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

The idea behind Consolidated Edison and Entergy Mississippi LLC 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.