Correlation Between Consolidated Edison and MUTUIONLINE
Can any of the company-specific risk be diversified away by investing in both Consolidated Edison and MUTUIONLINE 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 MUTUIONLINE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consolidated Edison and MUTUIONLINE, you can compare the effects of market volatilities on Consolidated Edison and MUTUIONLINE 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 MUTUIONLINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consolidated Edison and MUTUIONLINE.
Diversification Opportunities for Consolidated Edison and MUTUIONLINE
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Consolidated and MUTUIONLINE is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Edison and MUTUIONLINE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MUTUIONLINE 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 MUTUIONLINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MUTUIONLINE has no effect on the direction of Consolidated Edison i.e., Consolidated Edison and MUTUIONLINE go up and down completely randomly.
Pair Corralation between Consolidated Edison and MUTUIONLINE
Assuming the 90 days horizon Consolidated Edison is expected to generate 0.59 times more return on investment than MUTUIONLINE. However, Consolidated Edison is 1.71 times less risky than MUTUIONLINE. It trades about 0.31 of its potential returns per unit of risk. MUTUIONLINE is currently generating about -0.25 per unit of risk. If you would invest 8,624 in Consolidated Edison on October 24, 2024 and sell it today you would earn a total of 396.00 from holding Consolidated Edison or generate 4.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consolidated Edison vs. MUTUIONLINE
Performance |
| Timeline |
| Consolidated Edison |
| MUTUIONLINE |
Consolidated Edison and MUTUIONLINE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consolidated Edison and MUTUIONLINE
The main advantage of trading using opposite Consolidated Edison and MUTUIONLINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Edison position performs unexpectedly, MUTUIONLINE 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 MUTUIONLINE will offset losses from the drop in MUTUIONLINE's long position.| Consolidated Edison vs. Entravision Communications | Consolidated Edison vs. STGEORGE MINING LTD | Consolidated Edison vs. MOBILE FACTORY INC | Consolidated Edison vs. WillScot Mobile Mini |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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