Correlation Between Consolidated Edison and Altus Power
Can any of the company-specific risk be diversified away by investing in both Consolidated Edison and Altus Power 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 Consolidated Edison and Altus Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consolidated Edison and Altus Power, you can compare the effects of market volatilities on Consolidated Edison and Altus Power 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 Consolidated Edison with a short position of Altus Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consolidated Edison and Altus Power.
Diversification Opportunities for Consolidated Edison and Altus Power
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Consolidated and Altus is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Edison and Altus Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altus Power and Consolidated Edison 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 Consolidated Edison are associated (or correlated) with Altus Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altus Power has no effect on the direction of Consolidated Edison i.e., Consolidated Edison and Altus Power go up and down completely randomly.
Pair Corralation between Consolidated Edison and Altus Power
Allowing for the 90-day total investment horizon Consolidated Edison is expected to generate 0.36 times more return on investment than Altus Power. However, Consolidated Edison is 2.79 times less risky than Altus Power. It trades about 0.21 of its potential returns per unit of risk. Altus Power is currently generating about -0.08 per unit of risk. If you would invest 8,837 in Consolidated Edison on November 5, 2024 and sell it today you would earn a total of 537.00 from holding Consolidated Edison or generate 6.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consolidated Edison vs. Altus Power
Performance |
| Timeline |
| Consolidated Edison |
| Altus Power |
Consolidated Edison and Altus Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consolidated Edison and Altus Power
The main advantage of trading using opposite Consolidated Edison and Altus Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Edison position performs unexpectedly, Altus Power 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 Altus Power will offset losses from the drop in Altus Power's long position.| Consolidated Edison vs. Duke Energy | Consolidated Edison vs. Dominion Energy | Consolidated Edison vs. American Electric Power | Consolidated Edison vs. Nextera Energy |
| Altus Power vs. Ormat Technologies | Altus Power vs. Enlight Renewable Energy | Altus Power vs. Fluence Energy | Altus Power vs. Renew Energy Global |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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