Correlation Between Consumers Energy and Equitable Holdings
Can any of the company-specific risk be diversified away by investing in both Consumers Energy and Equitable Holdings 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 Equitable Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consumers Energy and Equitable Holdings, you can compare the effects of market volatilities on Consumers Energy and Equitable Holdings 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 Equitable Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consumers Energy and Equitable Holdings.
Diversification Opportunities for Consumers Energy and Equitable Holdings
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Consumers and Equitable is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Consumers Energy and Equitable Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equitable Holdings 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 Equitable Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equitable Holdings has no effect on the direction of Consumers Energy i.e., Consumers Energy and Equitable Holdings go up and down completely randomly.
Pair Corralation between Consumers Energy and Equitable Holdings
Assuming the 90 days trading horizon Consumers Energy is expected to generate 5.98 times less return on investment than Equitable Holdings. In addition to that, Consumers Energy is 1.32 times more volatile than Equitable Holdings. It trades about 0.0 of its total potential returns per unit of risk. Equitable Holdings is currently generating about 0.03 per unit of volatility. If you would invest 1,627 in Equitable Holdings on November 9, 2024 and sell it today you would earn a total of 212.00 from holding Equitable Holdings or generate 13.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consumers Energy vs. Equitable Holdings
Performance |
| Timeline |
| Consumers Energy |
| Equitable Holdings |
Consumers Energy and Equitable Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consumers Energy and Equitable Holdings
The main advantage of trading using opposite Consumers Energy and Equitable Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consumers Energy position performs unexpectedly, Equitable Holdings 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 Equitable Holdings will offset losses from the drop in Equitable Holdings' long position.| Consumers Energy vs. Nextera Energy | Consumers Energy vs. Duke Energy | Consumers Energy vs. PGE Corp | Consumers Energy vs. Southern Company |
| Equitable Holdings vs. Equitable Holdings | Equitable Holdings vs. Athene Holding | Equitable Holdings vs. MetLife Preferred Stock | Equitable Holdings vs. Bank of America |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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