Correlation Between Connecticut Light and Red Electrica
Can any of the company-specific risk be diversified away by investing in both Connecticut Light and Red Electrica 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 Connecticut Light and Red Electrica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Connecticut Light and Red Electrica Corporacion, you can compare the effects of market volatilities on Connecticut Light and Red Electrica 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 Connecticut Light with a short position of Red Electrica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Connecticut Light and Red Electrica.
Diversification Opportunities for Connecticut Light and Red Electrica
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Connecticut and Red is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding The Connecticut Light and Red Electrica Corporacion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Electrica Corporacion and Connecticut Light 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 The Connecticut Light are associated (or correlated) with Red Electrica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Electrica Corporacion has no effect on the direction of Connecticut Light i.e., Connecticut Light and Red Electrica go up and down completely randomly.
Pair Corralation between Connecticut Light and Red Electrica
Assuming the 90 days horizon The Connecticut Light is expected to generate 1.26 times more return on investment than Red Electrica. However, Connecticut Light is 1.26 times more volatile than Red Electrica Corporacion. It trades about 0.06 of its potential returns per unit of risk. Red Electrica Corporacion is currently generating about 0.06 per unit of risk. If you would invest 2,916 in The Connecticut Light on September 1, 2024 and sell it today you would earn a total of 407.00 from holding The Connecticut Light or generate 13.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 89.36% |
| Values | Daily Returns |
The Connecticut Light vs. Red Electrica Corporacion
Performance |
| Timeline |
| Connecticut Light |
| Red Electrica Corporacion |
Connecticut Light and Red Electrica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Connecticut Light and Red Electrica
The main advantage of trading using opposite Connecticut Light and Red Electrica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Connecticut Light position performs unexpectedly, Red Electrica 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 Red Electrica will offset losses from the drop in Red Electrica's long position.| Connecticut Light vs. Southern Company | Connecticut Light vs. Duke Energy | Connecticut Light vs. Duke Energy | Connecticut Light vs. National Grid PLC |
| Red Electrica vs. Southern Company | Red Electrica vs. Duke Energy | Red Electrica vs. Duke Energy | Red Electrica vs. National Grid PLC |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |