Correlation Between ENGIE ADR/1 and National Grid

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

0.16

Correlation Coefficient

ENGIE ADR/1  National Grid

Average diversification

The 3 months correlation between ENGIE and National is 0.16. 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

Assuming the 90 days trading horizon ENGIE ADR1 EO is expected to generate 0.61 times more return on investment than National Grid. However, ENGIE ADR1 EO is 1.63 times less risky than National Grid. It trades about 0.15 of its potential returns per unit of risk. National Grid plc is currently generating about 0.01 per unit of risk. If you would invest  1,710  in ENGIE ADR1 EO on April 24, 2025 and sell it today you would earn a total of  240.00  from holding ENGIE ADR1 EO or generate 14.04% return on investment over 90 days.

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

ENGIE ADR1 EO  vs.  National Grid plc

ENGIE ADR1 EO

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ENGIE ADR1 EO are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, ENGIE ADR/1 reported solid returns over the last few months and may actually be approaching a breakup point.

National Grid plc

Risk-Adjusted Performance

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 nearly stable technical and fundamental indicators, National Grid 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 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.