Correlation Between Darden Restaurants and NORTHEAST UTILITIES
Can any of the company-specific risk be diversified away by investing in both Darden Restaurants and NORTHEAST UTILITIES 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 Darden Restaurants and NORTHEAST UTILITIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Darden Restaurants and NORTHEAST UTILITIES, you can compare the effects of market volatilities on Darden Restaurants and NORTHEAST UTILITIES 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 Darden Restaurants with a short position of NORTHEAST UTILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Darden Restaurants and NORTHEAST UTILITIES.
Diversification Opportunities for Darden Restaurants and NORTHEAST UTILITIES
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Darden and NORTHEAST is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Darden Restaurants and NORTHEAST UTILITIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORTHEAST UTILITIES and Darden Restaurants 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 Darden Restaurants are associated (or correlated) with NORTHEAST UTILITIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORTHEAST UTILITIES has no effect on the direction of Darden Restaurants i.e., Darden Restaurants and NORTHEAST UTILITIES go up and down completely randomly.
Pair Corralation between Darden Restaurants and NORTHEAST UTILITIES
Assuming the 90 days trading horizon Darden Restaurants is expected to generate 1.96 times less return on investment than NORTHEAST UTILITIES. But when comparing it to its historical volatility, Darden Restaurants is 1.26 times less risky than NORTHEAST UTILITIES. It trades about 0.1 of its potential returns per unit of risk. NORTHEAST UTILITIES is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 5,450 in NORTHEAST UTILITIES on November 30, 2024 and sell it today you would earn a total of 600.00 from holding NORTHEAST UTILITIES or generate 11.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Darden Restaurants vs. NORTHEAST UTILITIES
Performance |
| Timeline |
| Darden Restaurants |
| NORTHEAST UTILITIES |
Darden Restaurants and NORTHEAST UTILITIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Darden Restaurants and NORTHEAST UTILITIES
The main advantage of trading using opposite Darden Restaurants and NORTHEAST UTILITIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Darden Restaurants position performs unexpectedly, NORTHEAST UTILITIES 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 NORTHEAST UTILITIES will offset losses from the drop in NORTHEAST UTILITIES's long position.| Darden Restaurants vs. MPH Health Care | Darden Restaurants vs. DEVRY EDUCATION GRP | Darden Restaurants vs. RCI Hospitality Holdings | Darden Restaurants vs. STRAYER EDUCATION |
| NORTHEAST UTILITIES vs. JLF INVESTMENT | NORTHEAST UTILITIES vs. Yunnan Water Investment | NORTHEAST UTILITIES vs. HK Electric Investments | NORTHEAST UTILITIES vs. Ebro Foods 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |