Correlation Between Consolidated Edison and TransAlta Corp
Can any of the company-specific risk be diversified away by investing in both Consolidated Edison and TransAlta Corp 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 TransAlta Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consolidated Edison and TransAlta Corp, you can compare the effects of market volatilities on Consolidated Edison and TransAlta Corp 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 TransAlta Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consolidated Edison and TransAlta Corp.
Diversification Opportunities for Consolidated Edison and TransAlta Corp
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Consolidated and TransAlta is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Edison and TransAlta Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransAlta Corp 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 TransAlta Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransAlta Corp has no effect on the direction of Consolidated Edison i.e., Consolidated Edison and TransAlta Corp go up and down completely randomly.
Pair Corralation between Consolidated Edison and TransAlta Corp
Allowing for the 90-day total investment horizon Consolidated Edison is expected to generate 0.29 times more return on investment than TransAlta Corp. However, Consolidated Edison is 3.41 times less risky than TransAlta Corp. It trades about 0.18 of its potential returns per unit of risk. TransAlta Corp is currently generating about -0.16 per unit of risk. If you would invest 8,903 in Consolidated Edison on November 2, 2024 and sell it today you would earn a total of 483.00 from holding Consolidated Edison or generate 5.43% 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. TransAlta Corp
Performance |
| Timeline |
| Consolidated Edison |
| TransAlta Corp |
Consolidated Edison and TransAlta Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consolidated Edison and TransAlta Corp
The main advantage of trading using opposite Consolidated Edison and TransAlta Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Edison position performs unexpectedly, TransAlta Corp 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 TransAlta Corp will offset losses from the drop in TransAlta Corp's long position.| Consolidated Edison vs. Duke Energy | Consolidated Edison vs. Dominion Energy | Consolidated Edison vs. American Electric Power | Consolidated Edison vs. Nextera Energy |
| TransAlta Corp vs. Pampa Energia SA | TransAlta Corp vs. Vistra Energy Corp | TransAlta Corp vs. NRG Energy | TransAlta Corp vs. Power Assets Holdings |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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