Correlation Between Unisys and Entergy

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

Diversification Opportunities for Unisys and Entergy

-0.15
  Correlation Coefficient

Good diversification

The 3 months correlation between Unisys and Entergy is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Unisys and Entergy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entergy and Unisys 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 Unisys are associated (or correlated) with Entergy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entergy has no effect on the direction of Unisys i.e., Unisys and Entergy go up and down completely randomly.

Pair Corralation between Unisys and Entergy

Considering the 90-day investment horizon Unisys is expected to under-perform the Entergy. In addition to that, Unisys is 3.23 times more volatile than Entergy. It trades about -0.11 of its total potential returns per unit of risk. Entergy is currently generating about 0.0 per unit of volatility. If you would invest  11,916  in Entergy on September 2, 2022 and sell it today you would lose (289.00)  from holding Entergy or give up 2.43% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Unisys  vs.  Entergy

 Performance (%) 
       Timeline  
Unisys 
Unisys Performance
0 of 100
Over the last 90 days Unisys has generated negative risk-adjusted returns adding no value to investors with long positions. Even with sluggish performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in January 2023. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Unisys Price Channel

Entergy 
Entergy Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Entergy are ranked lower than 1 (%) 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.

Entergy Price Channel

Unisys and Entergy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Unisys and Entergy

The main advantage of trading using opposite Unisys and Entergy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unisys position performs unexpectedly, Entergy 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 will offset losses from the drop in Entergy's long position.
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The idea behind Unisys and Entergy 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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Check out your portfolio center. 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 Transaction History module to view history of all your transactions and understand their impact on performance.

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