Correlation Between Carnegie Clean and EDISON INTL
Can any of the company-specific risk be diversified away by investing in both Carnegie Clean and EDISON INTL 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 Carnegie Clean and EDISON INTL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carnegie Clean Energy and EDISON INTL, you can compare the effects of market volatilities on Carnegie Clean and EDISON INTL 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 Carnegie Clean with a short position of EDISON INTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnegie Clean and EDISON INTL.
Diversification Opportunities for Carnegie Clean and EDISON INTL
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Carnegie and EDISON is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Carnegie Clean Energy and EDISON INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EDISON INTL and Carnegie Clean 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 Carnegie Clean Energy are associated (or correlated) with EDISON INTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EDISON INTL has no effect on the direction of Carnegie Clean i.e., Carnegie Clean and EDISON INTL go up and down completely randomly.
Pair Corralation between Carnegie Clean and EDISON INTL
Assuming the 90 days trading horizon Carnegie Clean Energy is expected to under-perform the EDISON INTL. In addition to that, Carnegie Clean is 2.47 times more volatile than EDISON INTL. It trades about -0.04 of its total potential returns per unit of risk. EDISON INTL is currently generating about -0.01 per unit of volatility. If you would invest 7,716 in EDISON INTL on September 14, 2024 and sell it today you would lose (32.00) from holding EDISON INTL or give up 0.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carnegie Clean Energy vs. EDISON INTL
Performance |
| Timeline |
| Carnegie Clean Energy |
| EDISON INTL |
Carnegie Clean and EDISON INTL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carnegie Clean and EDISON INTL
The main advantage of trading using opposite Carnegie Clean and EDISON INTL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carnegie Clean position performs unexpectedly, EDISON INTL 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 EDISON INTL will offset losses from the drop in EDISON INTL's long position.| Carnegie Clean vs. Superior Plus Corp | Carnegie Clean vs. SIVERS SEMICONDUCTORS AB | Carnegie Clean vs. Norsk Hydro ASA | Carnegie Clean vs. Reliance Steel Aluminum |
| EDISON INTL vs. Carnegie Clean Energy | EDISON INTL vs. MOVIE GAMES SA | EDISON INTL vs. SIDETRADE EO 1 | EDISON INTL vs. Canon Marketing Japan |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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