Correlation Between MSAD INSURANCE and NORTHEAST UTILITIES
Can any of the company-specific risk be diversified away by investing in both MSAD INSURANCE and NORTHEAST 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 MSAD INSURANCE and NORTHEAST UTILITIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MSAD INSURANCE and NORTHEAST UTILITIES, you can compare the effects of market volatilities on MSAD INSURANCE and NORTHEAST 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 MSAD INSURANCE with a short position of NORTHEAST UTILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSAD INSURANCE and NORTHEAST UTILITIES.
Diversification Opportunities for MSAD INSURANCE and NORTHEAST UTILITIES
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MSAD and NORTHEAST is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding MSAD INSURANCE and NORTHEAST UTILITIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORTHEAST UTILITIES and MSAD INSURANCE 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 MSAD INSURANCE are associated (or correlated) with NORTHEAST UTILITIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORTHEAST UTILITIES has no effect on the direction of MSAD INSURANCE i.e., MSAD INSURANCE and NORTHEAST UTILITIES go up and down completely randomly.
Pair Corralation between MSAD INSURANCE and NORTHEAST UTILITIES
Assuming the 90 days trading horizon MSAD INSURANCE is expected to generate 1.54 times more return on investment than NORTHEAST UTILITIES. However, MSAD INSURANCE is 1.54 times more volatile than NORTHEAST UTILITIES. It trades about 0.12 of its potential returns per unit of risk. NORTHEAST UTILITIES is currently generating about 0.04 per unit of risk. If you would invest 1,107 in MSAD INSURANCE on September 14, 2024 and sell it today you would earn a total of 1,053 from holding MSAD INSURANCE or generate 95.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MSAD INSURANCE vs. NORTHEAST UTILITIES
Performance |
| Timeline |
| MSAD INSURANCE |
| NORTHEAST UTILITIES |
MSAD INSURANCE and NORTHEAST UTILITIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MSAD INSURANCE and NORTHEAST UTILITIES
The main advantage of trading using opposite MSAD INSURANCE and NORTHEAST UTILITIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MSAD INSURANCE position performs unexpectedly, NORTHEAST 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 NORTHEAST UTILITIES will offset losses from the drop in NORTHEAST UTILITIES's long position.| MSAD INSURANCE vs. Luckin Coffee | MSAD INSURANCE vs. ScanSource | MSAD INSURANCE vs. Hanison Construction Holdings | MSAD INSURANCE vs. United Breweries Co |
| NORTHEAST UTILITIES vs. Micron Technology | NORTHEAST UTILITIES vs. MSAD INSURANCE | NORTHEAST UTILITIES vs. Universal Insurance Holdings | NORTHEAST UTILITIES vs. Amkor Technology |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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