Correlation Between FirstEnergy and Empresa Distribuidora
Can any of the company-specific risk be diversified away by investing in both FirstEnergy and Empresa Distribuidora 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 FirstEnergy and Empresa Distribuidora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FirstEnergy and Empresa Distribuidora y, you can compare the effects of market volatilities on FirstEnergy and Empresa Distribuidora 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 FirstEnergy with a short position of Empresa Distribuidora. Check out your portfolio center. Please also check ongoing floating volatility patterns of FirstEnergy and Empresa Distribuidora.
Diversification Opportunities for FirstEnergy and Empresa Distribuidora
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between FirstEnergy and Empresa is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding FirstEnergy and Empresa Distribuidora y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empresa Distribuidora and FirstEnergy 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 FirstEnergy are associated (or correlated) with Empresa Distribuidora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empresa Distribuidora has no effect on the direction of FirstEnergy i.e., FirstEnergy and Empresa Distribuidora go up and down completely randomly.
Pair Corralation between FirstEnergy and Empresa Distribuidora
Allowing for the 90-day total investment horizon FirstEnergy is expected to generate 11.58 times less return on investment than Empresa Distribuidora. But when comparing it to its historical volatility, FirstEnergy is 3.57 times less risky than Empresa Distribuidora. It trades about 0.03 of its potential returns per unit of risk. Empresa Distribuidora y is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 868.00 in Empresa Distribuidora y on August 27, 2024 and sell it today you would earn a total of 2,761 from holding Empresa Distribuidora y or generate 318.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FirstEnergy vs. Empresa Distribuidora y
Performance |
| Timeline |
| FirstEnergy |
| Empresa Distribuidora |
FirstEnergy and Empresa Distribuidora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FirstEnergy and Empresa Distribuidora
The main advantage of trading using opposite FirstEnergy and Empresa Distribuidora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FirstEnergy position performs unexpectedly, Empresa Distribuidora 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 Empresa Distribuidora will offset losses from the drop in Empresa Distribuidora's long position.| FirstEnergy vs. CenterPoint Energy | FirstEnergy vs. Pinnacle West Capital | FirstEnergy vs. Edison International | FirstEnergy vs. Public Service Enterprise |
| Empresa Distribuidora vs. Dominion Energy | Empresa Distribuidora vs. Consolidated Edison | Empresa Distribuidora vs. Eversource Energy | Empresa Distribuidora vs. FirstEnergy |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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