Correlation Between Avangrid and SCE Trust
Can any of the company-specific risk be diversified away by investing in both Avangrid and SCE Trust 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 SCE Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avangrid and SCE Trust VIII, you can compare the effects of market volatilities on Avangrid and SCE Trust 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 SCE Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avangrid and SCE Trust.
Diversification Opportunities for Avangrid and SCE Trust
Very good diversification
The 3 months correlation between Avangrid and SCE is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Avangrid and SCE Trust VIII in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCE Trust VIII 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 SCE Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCE Trust VIII has no effect on the direction of Avangrid i.e., Avangrid and SCE Trust go up and down completely randomly.
Pair Corralation between Avangrid and SCE Trust
Considering the 90-day investment horizon Avangrid is expected to generate 0.96 times more return on investment than SCE Trust. However, Avangrid is 1.04 times less risky than SCE Trust. It trades about 0.11 of its potential returns per unit of risk. SCE Trust VIII is currently generating about -0.26 per unit of risk. If you would invest 3,540 in Avangrid on September 13, 2024 and sell it today you would earn a total of 21.50 from holding Avangrid or generate 0.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Avangrid vs. SCE Trust VIII
Performance |
| Timeline |
| Avangrid |
| SCE Trust VIII |
Avangrid and SCE Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avangrid and SCE Trust
The main advantage of trading using opposite Avangrid and SCE Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avangrid position performs unexpectedly, SCE Trust 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 SCE Trust will offset losses from the drop in SCE Trust's long position.The idea behind Avangrid and SCE Trust VIII 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.| SCE Trust vs. Dominion Energy | SCE Trust vs. Consolidated Edison | SCE Trust vs. Eversource Energy | SCE Trust vs. FirstEnergy |
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.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |