Correlation Between Consolidated Edison and Gabelli Utilities
Can any of the company-specific risk be diversified away by investing in both Consolidated Edison and Gabelli 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 Consolidated Edison and Gabelli Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consolidated Edison and The Gabelli Utilities, you can compare the effects of market volatilities on Consolidated Edison and Gabelli 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 Consolidated Edison with a short position of Gabelli Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consolidated Edison and Gabelli Utilities.
Diversification Opportunities for Consolidated Edison and Gabelli Utilities
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Consolidated and Gabelli is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Edison and The Gabelli Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Utilities 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 Gabelli Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Utilities has no effect on the direction of Consolidated Edison i.e., Consolidated Edison and Gabelli Utilities go up and down completely randomly.
Pair Corralation between Consolidated Edison and Gabelli Utilities
Allowing for the 90-day total investment horizon Consolidated Edison is expected to under-perform the Gabelli Utilities. In addition to that, Consolidated Edison is 1.6 times more volatile than The Gabelli Utilities. It trades about -0.11 of its total potential returns per unit of risk. The Gabelli Utilities is currently generating about -0.13 per unit of volatility. If you would invest 540.00 in The Gabelli Utilities on September 15, 2024 and sell it today you would lose (11.00) from holding The Gabelli Utilities or give up 2.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Consolidated Edison vs. The Gabelli Utilities
Performance |
| Timeline |
| Consolidated Edison |
| Gabelli Utilities |
Consolidated Edison and Gabelli Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consolidated Edison and Gabelli Utilities
The main advantage of trading using opposite Consolidated Edison and Gabelli Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Edison position performs unexpectedly, Gabelli 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 Gabelli Utilities will offset losses from the drop in Gabelli Utilities' long position.| Consolidated Edison vs. Duke Energy | Consolidated Edison vs. Dominion Energy | Consolidated Edison vs. American Electric Power | Consolidated Edison vs. Nextera Energy |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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