Correlation Between Connecticut Light and IDACORP
Can any of the company-specific risk be diversified away by investing in both Connecticut Light and IDACORP 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 IDACORP 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 IDACORP, you can compare the effects of market volatilities on Connecticut Light and IDACORP 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 IDACORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Connecticut Light and IDACORP.
Diversification Opportunities for Connecticut Light and IDACORP
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Connecticut and IDACORP is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding The Connecticut Light and IDACORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDACORP 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 IDACORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDACORP has no effect on the direction of Connecticut Light i.e., Connecticut Light and IDACORP go up and down completely randomly.
Pair Corralation between Connecticut Light and IDACORP
Assuming the 90 days horizon The Connecticut Light is expected to under-perform the IDACORP. In addition to that, Connecticut Light is 2.53 times more volatile than IDACORP. It trades about -0.06 of its total potential returns per unit of risk. IDACORP is currently generating about -0.11 per unit of volatility. If you would invest 11,289 in IDACORP on October 11, 2024 and sell it today you would lose (246.00) from holding IDACORP or give up 2.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
The Connecticut Light vs. IDACORP
Performance |
| Timeline |
| Connecticut Light |
| IDACORP |
Connecticut Light and IDACORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Connecticut Light and IDACORP
The main advantage of trading using opposite Connecticut Light and IDACORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Connecticut Light position performs unexpectedly, IDACORP 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 IDACORP will offset losses from the drop in IDACORP's long position.| Connecticut Light vs. NH Foods Ltd | Connecticut Light vs. ServiceNow | Connecticut Light vs. Cadence Design Systems | Connecticut Light vs. Rackspace Technology |
| IDACORP vs. CMS Energy | IDACORP vs. Pinnacle West Capital | IDACORP vs. Alliant Energy Corp | IDACORP vs. Portland General Electric |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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