Correlation Between BRIT AMER and NORTHEAST UTILITIES
Can any of the company-specific risk be diversified away by investing in both BRIT AMER 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 BRIT AMER and NORTHEAST UTILITIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRIT AMER TOBACCO and NORTHEAST UTILITIES, you can compare the effects of market volatilities on BRIT AMER 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 BRIT AMER with a short position of NORTHEAST UTILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRIT AMER and NORTHEAST UTILITIES.
Diversification Opportunities for BRIT AMER and NORTHEAST UTILITIES
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BRIT and NORTHEAST is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding BRIT AMER TOBACCO and NORTHEAST UTILITIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORTHEAST UTILITIES and BRIT AMER 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 BRIT AMER TOBACCO 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 BRIT AMER i.e., BRIT AMER and NORTHEAST UTILITIES go up and down completely randomly.
Pair Corralation between BRIT AMER and NORTHEAST UTILITIES
Assuming the 90 days trading horizon BRIT AMER TOBACCO is expected to generate 0.83 times more return on investment than NORTHEAST UTILITIES. However, BRIT AMER TOBACCO is 1.2 times less risky than NORTHEAST UTILITIES. It trades about 0.27 of its potential returns per unit of risk. NORTHEAST UTILITIES is currently generating about 0.11 per unit of risk. If you would invest 3,556 in BRIT AMER TOBACCO on November 7, 2024 and sell it today you would earn a total of 266.00 from holding BRIT AMER TOBACCO or generate 7.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
BRIT AMER TOBACCO vs. NORTHEAST UTILITIES
Performance |
| Timeline |
| BRIT AMER TOBACCO |
| NORTHEAST UTILITIES |
BRIT AMER and NORTHEAST UTILITIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRIT AMER and NORTHEAST UTILITIES
The main advantage of trading using opposite BRIT AMER and NORTHEAST UTILITIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRIT AMER 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.| BRIT AMER vs. FAST RETAIL ADR | BRIT AMER vs. Sterling Construction | BRIT AMER vs. Chesapeake Utilities | BRIT AMER vs. United Utilities Group |
| 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |