Correlation Between Consolidated Edison and Vast Renewables
Can any of the company-specific risk be diversified away by investing in both Consolidated Edison and Vast Renewables 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 Vast Renewables into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consolidated Edison and Vast Renewables Limited, you can compare the effects of market volatilities on Consolidated Edison and Vast Renewables 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 Vast Renewables. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consolidated Edison and Vast Renewables.
Diversification Opportunities for Consolidated Edison and Vast Renewables
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Consolidated and Vast is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Edison and Vast Renewables Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vast Renewables 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 Vast Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vast Renewables has no effect on the direction of Consolidated Edison i.e., Consolidated Edison and Vast Renewables go up and down completely randomly.
Pair Corralation between Consolidated Edison and Vast Renewables
Allowing for the 90-day total investment horizon Consolidated Edison is expected to generate 4.49 times less return on investment than Vast Renewables. But when comparing it to its historical volatility, Consolidated Edison is 15.89 times less risky than Vast Renewables. It trades about 0.05 of its potential returns per unit of risk. Vast Renewables Limited is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 250.00 in Vast Renewables Limited on November 28, 2024 and sell it today you would lose (193.00) from holding Vast Renewables Limited or give up 77.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consolidated Edison vs. Vast Renewables Limited
Performance |
| Timeline |
| Consolidated Edison |
| Vast Renewables |
Consolidated Edison and Vast Renewables Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consolidated Edison and Vast Renewables
The main advantage of trading using opposite Consolidated Edison and Vast Renewables positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Edison position performs unexpectedly, Vast Renewables 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 Vast Renewables will offset losses from the drop in Vast Renewables' 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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