Correlation Between Consumers Energy and Connecticut Light
Can any of the company-specific risk be diversified away by investing in both Consumers Energy 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 Consumers Energy and Connecticut Light into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consumers Energy and The Connecticut Light, you can compare the effects of market volatilities on Consumers Energy 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 Consumers Energy with a short position of Connecticut Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consumers Energy and Connecticut Light.
Diversification Opportunities for Consumers Energy and Connecticut Light
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Consumers and Connecticut is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Consumers Energy and The Connecticut Light in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Connecticut Light and Consumers Energy 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 Consumers Energy 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 Consumers Energy i.e., Consumers Energy and Connecticut Light go up and down completely randomly.
Pair Corralation between Consumers Energy and Connecticut Light
Assuming the 90 days trading horizon Consumers Energy is expected to under-perform the Connecticut Light. But the preferred stock apears to be less risky and, when comparing its historical volatility, Consumers Energy is 1.14 times less risky than Connecticut Light. The preferred stock trades about -0.19 of its potential returns per unit of risk. The The Connecticut Light is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 4,300 in The Connecticut Light on August 29, 2024 and sell it today you would lose (200.00) from holding The Connecticut Light or give up 4.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consumers Energy vs. The Connecticut Light
Performance |
| Timeline |
| Consumers Energy |
| Connecticut Light |
Consumers Energy and Connecticut Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consumers Energy and Connecticut Light
The main advantage of trading using opposite Consumers Energy and Connecticut Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consumers Energy 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.| Consumers Energy vs. Nextera Energy | Consumers Energy vs. Duke Energy | Consumers Energy vs. PGE Corp | Consumers Energy vs. Southern Company |
| Connecticut Light vs. Red Electrica Corporacion | Connecticut Light vs. Centrais Eltricas Brasileiras | 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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |