Correlation Between American Electric and Eversource Energy
Can any of the company-specific risk be diversified away by investing in both American Electric and Eversource Energy 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 American Electric and Eversource Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Electric Power and Eversource Energy, you can compare the effects of market volatilities on American Electric and Eversource Energy 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 American Electric with a short position of Eversource Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Electric and Eversource Energy.
Diversification Opportunities for American Electric and Eversource Energy
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and Eversource is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Electric Power and Eversource Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eversource Energy and American Electric 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 American Electric Power are associated (or correlated) with Eversource Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eversource Energy has no effect on the direction of American Electric i.e., American Electric and Eversource Energy go up and down completely randomly.
Pair Corralation between American Electric and Eversource Energy
If you would invest 8,906 in American Electric Power on August 30, 2024 and sell it today you would earn a total of 594.00 from holding American Electric Power or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
American Electric Power vs. Eversource Energy
Performance |
| Timeline |
| American Electric Power |
| Eversource Energy |
American Electric and Eversource Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Electric and Eversource Energy
The main advantage of trading using opposite American Electric and Eversource Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Electric position performs unexpectedly, Eversource Energy 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 Eversource Energy will offset losses from the drop in Eversource Energy's long position.| American Electric vs. International Game Technology | American Electric vs. APPLIED MATERIALS | American Electric vs. Eagle Materials | American Electric vs. Rayonier Advanced Materials |
| Eversource Energy vs. National Beverage Corp | Eversource Energy vs. Kaiser Aluminum | Eversource Energy vs. AUSNUTRIA DAIRY | Eversource Energy vs. PREMIER FOODS |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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