Correlation Between Consolidated Edison and Artesian Resources
Can any of the company-specific risk be diversified away by investing in both Consolidated Edison and Artesian Resources 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 Artesian Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consolidated Edison and Artesian Resources, you can compare the effects of market volatilities on Consolidated Edison and Artesian Resources 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 Artesian Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consolidated Edison and Artesian Resources.
Diversification Opportunities for Consolidated Edison and Artesian Resources
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Consolidated and Artesian is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Edison and Artesian Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artesian Resources 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 Artesian Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artesian Resources has no effect on the direction of Consolidated Edison i.e., Consolidated Edison and Artesian Resources go up and down completely randomly.
Pair Corralation between Consolidated Edison and Artesian Resources
Allowing for the 90-day total investment horizon Consolidated Edison is expected to generate 0.9 times more return on investment than Artesian Resources. However, Consolidated Edison is 1.11 times less risky than Artesian Resources. It trades about 0.17 of its potential returns per unit of risk. Artesian Resources is currently generating about -0.02 per unit of risk. If you would invest 8,903 in Consolidated Edison on November 3, 2024 and sell it today you would earn a total of 471.00 from holding Consolidated Edison or generate 5.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consolidated Edison vs. Artesian Resources
Performance |
| Timeline |
| Consolidated Edison |
| Artesian Resources |
Consolidated Edison and Artesian Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consolidated Edison and Artesian Resources
The main advantage of trading using opposite Consolidated Edison and Artesian Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Edison position performs unexpectedly, Artesian Resources 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 Artesian Resources will offset losses from the drop in Artesian Resources' long position.| Consolidated Edison vs. Duke Energy | Consolidated Edison vs. Dominion Energy | Consolidated Edison vs. American Electric Power | Consolidated Edison vs. Nextera Energy |
| Artesian Resources vs. California Water Service | Artesian Resources vs. SJW Group Common | Artesian Resources vs. The York Water | Artesian Resources vs. American States Water |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |