Correlation Between Empire Global and Connecticut Light
Can any of the company-specific risk be diversified away by investing in both Empire Global and Connecticut Light 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 Empire Global and Connecticut Light into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empire Global Gaming and The Connecticut Light, you can compare the effects of market volatilities on Empire Global and Connecticut Light 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 Empire Global with a short position of Connecticut Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire Global and Connecticut Light.
Diversification Opportunities for Empire Global and Connecticut Light
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Empire and Connecticut is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Empire Global Gaming and The Connecticut Light in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Connecticut Light and Empire Global 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 Empire Global Gaming are associated (or correlated) with Connecticut Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Connecticut Light has no effect on the direction of Empire Global i.e., Empire Global and Connecticut Light go up and down completely randomly.
Pair Corralation between Empire Global and Connecticut Light
Given the investment horizon of 90 days Empire Global Gaming is expected to under-perform the Connecticut Light. In addition to that, Empire Global is 8.74 times more volatile than The Connecticut Light. It trades about -0.12 of its total potential returns per unit of risk. The Connecticut Light is currently generating about 0.02 per unit of volatility. If you would invest 4,042 in The Connecticut Light on September 1, 2024 and sell it today you would earn a total of 58.00 from holding The Connecticut Light or generate 1.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Empire Global Gaming vs. The Connecticut Light
Performance |
| Timeline |
| Empire Global Gaming |
| Connecticut Light |
Empire Global and Connecticut Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire Global and Connecticut Light
The main advantage of trading using opposite Empire Global and Connecticut Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire Global position performs unexpectedly, Connecticut Light 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 Connecticut Light will offset losses from the drop in Connecticut Light's long position.| Empire Global vs. Churchill Downs Incorporated | Empire Global vs. Gan | Empire Global vs. Rush Street Interactive | Empire Global vs. Lottery, Common Stock |
| Connecticut Light vs. Southern Company | Connecticut Light vs. Duke Energy | Connecticut Light vs. Duke Energy | Connecticut Light vs. National Grid PLC |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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