Correlation Between INTER CARS and NORTHEAST UTILITIES
Can any of the company-specific risk be diversified away by investing in both INTER CARS 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 INTER CARS and NORTHEAST UTILITIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INTER CARS SA and NORTHEAST UTILITIES, you can compare the effects of market volatilities on INTER CARS 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 INTER CARS with a short position of NORTHEAST UTILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTER CARS and NORTHEAST UTILITIES.
Diversification Opportunities for INTER CARS and NORTHEAST UTILITIES
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between INTER and NORTHEAST is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding INTER CARS SA and NORTHEAST UTILITIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORTHEAST UTILITIES and INTER CARS 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 INTER CARS SA 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 INTER CARS i.e., INTER CARS and NORTHEAST UTILITIES go up and down completely randomly.
Pair Corralation between INTER CARS and NORTHEAST UTILITIES
Assuming the 90 days horizon INTER CARS SA is expected to generate 1.22 times more return on investment than NORTHEAST UTILITIES. However, INTER CARS is 1.22 times more volatile than NORTHEAST UTILITIES. It trades about 0.31 of its potential returns per unit of risk. NORTHEAST UTILITIES is currently generating about 0.11 per unit of risk. If you would invest 11,860 in INTER CARS SA on November 7, 2024 and sell it today you would earn a total of 1,480 from holding INTER CARS SA or generate 12.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 86.96% |
| Values | Daily Returns |
INTER CARS SA vs. NORTHEAST UTILITIES
Performance |
| Timeline |
| INTER CARS SA |
| NORTHEAST UTILITIES |
INTER CARS and NORTHEAST UTILITIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INTER CARS and NORTHEAST UTILITIES
The main advantage of trading using opposite INTER CARS and NORTHEAST UTILITIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTER CARS 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.| INTER CARS vs. Allegheny Technologies Incorporated | INTER CARS vs. HEALTHSTREAM | INTER CARS vs. WESANA HEALTH HOLD | INTER CARS vs. NIGHTINGALE HEALTH EO |
| NORTHEAST UTILITIES vs. CORNISH METALS INC | NORTHEAST UTILITIES vs. MCEWEN MINING INC | NORTHEAST UTILITIES vs. Monster Beverage Corp | NORTHEAST UTILITIES vs. SAN MIGUEL BREWERY |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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