Correlation Between Central Puerto and Consolidated Edison
Can any of the company-specific risk be diversified away by investing in both Central Puerto and Consolidated Edison 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 Central Puerto and Consolidated Edison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Puerto SA and Consolidated Edison, you can compare the effects of market volatilities on Central Puerto and Consolidated Edison 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 Central Puerto with a short position of Consolidated Edison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Puerto and Consolidated Edison.
Diversification Opportunities for Central Puerto and Consolidated Edison
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Central and Consolidated is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Central Puerto SA and Consolidated Edison in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Edison and Central Puerto 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 Central Puerto SA are associated (or correlated) with Consolidated Edison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Edison has no effect on the direction of Central Puerto i.e., Central Puerto and Consolidated Edison go up and down completely randomly.
Pair Corralation between Central Puerto and Consolidated Edison
Given the investment horizon of 90 days Central Puerto SA is expected to generate 2.64 times more return on investment than Consolidated Edison. However, Central Puerto is 2.64 times more volatile than Consolidated Edison. It trades about 0.12 of its potential returns per unit of risk. Consolidated Edison is currently generating about 0.07 per unit of risk. If you would invest 938.00 in Central Puerto SA on September 1, 2024 and sell it today you would earn a total of 425.00 from holding Central Puerto SA or generate 45.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Puerto SA vs. Consolidated Edison
Performance |
| Timeline |
| Central Puerto SA |
| Consolidated Edison |
Central Puerto and Consolidated Edison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Puerto and Consolidated Edison
The main advantage of trading using opposite Central Puerto and Consolidated Edison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Puerto position performs unexpectedly, Consolidated Edison 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 Consolidated Edison will offset losses from the drop in Consolidated Edison's long position.| Central Puerto vs. Korea Electric Power | Central Puerto vs. Centrais Electricas Brasileiras | Central Puerto vs. MGE Energy | Central Puerto vs. IDACORP |
| Consolidated Edison vs. Duke Energy | Consolidated Edison vs. Dominion Energy | Consolidated Edison vs. American Electric Power | Consolidated Edison vs. Nextera Energy |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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