Correlation Between Eversource Energy and Northwest Natural
Can any of the company-specific risk be diversified away by investing in both Eversource Energy and Northwest Natural 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 Eversource Energy and Northwest Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eversource Energy and Northwest Natural Gas, you can compare the effects of market volatilities on Eversource Energy and Northwest Natural 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 Eversource Energy with a short position of Northwest Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eversource Energy and Northwest Natural.
Diversification Opportunities for Eversource Energy and Northwest Natural
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eversource and Northwest is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Eversource Energy and Northwest Natural Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northwest Natural Gas and Eversource Energy 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 Eversource Energy are associated (or correlated) with Northwest Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northwest Natural Gas has no effect on the direction of Eversource Energy i.e., Eversource Energy and Northwest Natural go up and down completely randomly.
Pair Corralation between Eversource Energy and Northwest Natural
Allowing for the 90-day total investment horizon Eversource Energy is expected to generate 1.88 times less return on investment than Northwest Natural. But when comparing it to its historical volatility, Eversource Energy is 1.04 times less risky than Northwest Natural. It trades about 0.08 of its potential returns per unit of risk. Northwest Natural Gas is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3,481 in Northwest Natural Gas on August 24, 2024 and sell it today you would earn a total of 840.00 from holding Northwest Natural Gas or generate 24.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Eversource Energy vs. Northwest Natural Gas
Performance |
| Timeline |
| Eversource Energy |
| Northwest Natural Gas |
Eversource Energy and Northwest Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eversource Energy and Northwest Natural
The main advantage of trading using opposite Eversource Energy and Northwest Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eversource Energy position performs unexpectedly, Northwest Natural 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 Northwest Natural will offset losses from the drop in Northwest Natural's long position.| Eversource Energy vs. CenterPoint Energy | Eversource Energy vs. FirstEnergy | Eversource Energy vs. Pinnacle West Capital | Eversource Energy vs. Edison International |
| Northwest Natural vs. Chesapeake Utilities | Northwest Natural vs. One Gas | Northwest Natural vs. NiSource | Northwest Natural vs. NewJersey Resources |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |