Correlation Between ENGIE ADR/1 and Canadian Utilities

Can any of the company-specific risk be diversified away by investing in both ENGIE ADR/1 and Canadian Utilities 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 Canadian Utilities 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 Canadian Utilities Limited, you can compare the effects of market volatilities on ENGIE ADR/1 and Canadian Utilities 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 Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENGIE ADR/1 and Canadian Utilities.

Diversification Opportunities for ENGIE ADR/1 and Canadian Utilities

-0.09

Correlation Coefficient

ENGIE ADR/1  Canadian Utilities

Good diversification

The 3 months correlation between ENGIE and Canadian is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding ENGIE ADR1 EO and Canadian Utilities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities 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 Canadian Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Utilities has no effect on the direction of ENGIE ADR/1 i.e., ENGIE ADR/1 and Canadian Utilities go up and down completely randomly.

Pair Corralation between ENGIE ADR/1 and Canadian Utilities

Assuming the 90 days trading horizon ENGIE ADR1 EO is expected to generate 2.08 times more return on investment than Canadian Utilities. However, ENGIE ADR/1 is 2.08 times more volatile than Canadian Utilities Limited. It trades about 0.16 of its potential returns per unit of risk. Canadian Utilities Limited is currently generating about 0.05 per unit of risk. If you would invest  1,701  in ENGIE ADR1 EO on April 17, 2025 and sell it today you would earn a total of  249.00  from holding ENGIE ADR1 EO or generate 14.64% return on investment over 90 days.

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

ENGIE ADR1 EO  vs.  Canadian Utilities Limited

ENGIE ADR1 EO

Risk-Adjusted Performance

Good

Over the last 90 days ENGIE ADR1 EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak technical and fundamental indicators, ENGIE ADR/1 reported solid returns over the last few months and may actually be approaching a breakup point.

Canadian Utilities

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Utilities Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Canadian Utilities is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ENGIE ADR/1 and Canadian Utilities

The main advantage of trading using opposite ENGIE ADR/1 and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENGIE ADR/1 position performs unexpectedly, Canadian Utilities 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 Canadian Utilities will offset losses from the drop in Canadian Utilities' long position.

The idea behind ENGIE ADR1 EO and Canadian Utilities Limited 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.

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 the Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.