Correlation Between Consolidated Edison and NextEra Energy,
Can any of the company-specific risk be diversified away by investing in both Consolidated Edison and NextEra Energy, 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 NextEra Energy, into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consolidated Edison and NextEra Energy,, you can compare the effects of market volatilities on Consolidated Edison and NextEra Energy, 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 NextEra Energy,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consolidated Edison and NextEra Energy,.
Diversification Opportunities for Consolidated Edison and NextEra Energy,
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Consolidated and NextEra is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Edison and NextEra Energy, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextEra Energy, 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 NextEra Energy,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextEra Energy, has no effect on the direction of Consolidated Edison i.e., Consolidated Edison and NextEra Energy, go up and down completely randomly.
Pair Corralation between Consolidated Edison and NextEra Energy,
Allowing for the 90-day total investment horizon Consolidated Edison is expected to under-perform the NextEra Energy,. But the stock apears to be less risky and, when comparing its historical volatility, Consolidated Edison is 1.54 times less risky than NextEra Energy,. The stock trades about -0.35 of its potential returns per unit of risk. The NextEra Energy, is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest 5,559 in NextEra Energy, on August 24, 2024 and sell it today you would lose (336.00) from holding NextEra Energy, or give up 6.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consolidated Edison vs. NextEra Energy,
Performance |
| Timeline |
| Consolidated Edison |
| NextEra Energy, |
Consolidated Edison and NextEra Energy, Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consolidated Edison and NextEra Energy,
The main advantage of trading using opposite Consolidated Edison and NextEra Energy, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Edison position performs unexpectedly, NextEra Energy, 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 NextEra Energy, will offset losses from the drop in NextEra Energy,'s long position.| Consolidated Edison vs. Korea Electric Power | Consolidated Edison vs. Centrais Electricas Brasileiras | Consolidated Edison vs. MGE Energy | Consolidated Edison vs. IDACORP |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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