Correlation Between Consolidated Edison and Central Puerto
Can any of the company-specific risk be diversified away by investing in both Consolidated Edison and Central Puerto 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 Central Puerto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consolidated Edison and Central Puerto SA, you can compare the effects of market volatilities on Consolidated Edison and Central Puerto 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 Central Puerto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consolidated Edison and Central Puerto.
Diversification Opportunities for Consolidated Edison and Central Puerto
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Consolidated and Central is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Edison and Central Puerto SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Puerto SA 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 Central Puerto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Puerto SA has no effect on the direction of Consolidated Edison i.e., Consolidated Edison and Central Puerto go up and down completely randomly.
Pair Corralation between Consolidated Edison and Central Puerto
Allowing for the 90-day total investment horizon Consolidated Edison is expected to generate 16.1 times less return on investment than Central Puerto. But when comparing it to its historical volatility, Consolidated Edison is 2.96 times less risky than Central Puerto. It trades about 0.01 of its potential returns per unit of risk. Central Puerto SA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 528.00 in Central Puerto SA on October 25, 2024 and sell it today you would earn a total of 858.00 from holding Central Puerto SA or generate 162.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consolidated Edison vs. Central Puerto SA
Performance |
| Timeline |
| Consolidated Edison |
| Central Puerto SA |
Consolidated Edison and Central Puerto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consolidated Edison and Central Puerto
The main advantage of trading using opposite Consolidated Edison and Central Puerto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Edison position performs unexpectedly, Central Puerto 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 Central Puerto will offset losses from the drop in Central Puerto's long position.| Consolidated Edison vs. Duke Energy | Consolidated Edison vs. Dominion Energy | Consolidated Edison vs. American Electric Power | Consolidated Edison vs. Nextera Energy |
| Central Puerto vs. Korea Electric Power | Central Puerto vs. Centrais Electricas Brasileiras | Central Puerto vs. MGE Energy | Central Puerto vs. IDACORP |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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