Correlation Between Consolidated Edison and CEZ A
Can any of the company-specific risk be diversified away by investing in both Consolidated Edison and CEZ A 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 CEZ A into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consolidated Edison and CEZ a s, you can compare the effects of market volatilities on Consolidated Edison and CEZ A 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 CEZ A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consolidated Edison and CEZ A.
Diversification Opportunities for Consolidated Edison and CEZ A
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Consolidated and CEZ is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Edison and CEZ a s in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEZ a s 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 CEZ A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEZ a s has no effect on the direction of Consolidated Edison i.e., Consolidated Edison and CEZ A go up and down completely randomly.
Pair Corralation between Consolidated Edison and CEZ A
Assuming the 90 days horizon Consolidated Edison is expected to under-perform the CEZ A. In addition to that, Consolidated Edison is 1.12 times more volatile than CEZ a s. It trades about -0.08 of its total potential returns per unit of risk. CEZ a s is currently generating about 0.32 per unit of volatility. If you would invest 3,532 in CEZ a s on September 13, 2024 and sell it today you would earn a total of 246.00 from holding CEZ a s or generate 6.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Consolidated Edison vs. CEZ a s
Performance |
| Timeline |
| Consolidated Edison |
| CEZ a s |
Consolidated Edison and CEZ A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consolidated Edison and CEZ A
The main advantage of trading using opposite Consolidated Edison and CEZ A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Edison position performs unexpectedly, CEZ A 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 CEZ A will offset losses from the drop in CEZ A's long position.| Consolidated Edison vs. NextEra Energy | Consolidated Edison vs. PGE Corporation | Consolidated Edison vs. Xcel Energy | Consolidated Edison vs. Eversource Energy |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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