Correlation Between Avangrid and Connecticut Light
Can any of the company-specific risk be diversified away by investing in both Avangrid and Connecticut Light 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 Avangrid and Connecticut Light into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avangrid and The Connecticut Light, you can compare the effects of market volatilities on Avangrid and Connecticut Light 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 Avangrid with a short position of Connecticut Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avangrid and Connecticut Light.
Diversification Opportunities for Avangrid and Connecticut Light
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Avangrid and Connecticut is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Avangrid and The Connecticut Light in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Connecticut Light and Avangrid 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 Avangrid are associated (or correlated) with Connecticut Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Connecticut Light has no effect on the direction of Avangrid i.e., Avangrid and Connecticut Light go up and down completely randomly.
Pair Corralation between Avangrid and Connecticut Light
Considering the 90-day investment horizon Avangrid is expected to generate 1.19 times less return on investment than Connecticut Light. But when comparing it to its historical volatility, Avangrid is 1.57 times less risky than Connecticut Light. It trades about 0.05 of its potential returns per unit of risk. The Connecticut Light is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,065 in The Connecticut Light on September 14, 2024 and sell it today you would earn a total of 385.00 from holding The Connecticut Light or generate 12.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 82.73% |
| Values | Daily Returns |
Avangrid vs. The Connecticut Light
Performance |
| Timeline |
| Avangrid |
| Connecticut Light |
Avangrid and Connecticut Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avangrid and Connecticut Light
The main advantage of trading using opposite Avangrid and Connecticut Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avangrid position performs unexpectedly, Connecticut Light 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 Connecticut Light will offset losses from the drop in Connecticut Light's long position.| Avangrid vs. Centrais Eltricas Brasileiras | Avangrid vs. Korea Electric Power | Avangrid vs. CMS Energy | Avangrid vs. Centrais Electricas Brasileiras |
| Connecticut Light vs. Avangrid | Connecticut Light vs. Dominion Energy | Connecticut Light vs. Centrais Electricas Brasileiras | Connecticut Light vs. Enel Chile SA |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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