Correlation Between IDACORP and Connecticut Light
Can any of the company-specific risk be diversified away by investing in both IDACORP 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 IDACORP and Connecticut Light into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IDACORP and The Connecticut Light, you can compare the effects of market volatilities on IDACORP 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 IDACORP with a short position of Connecticut Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of IDACORP and Connecticut Light.
Diversification Opportunities for IDACORP and Connecticut Light
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IDACORP and Connecticut is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding IDACORP and The Connecticut Light in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Connecticut Light and IDACORP 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 IDACORP 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 IDACORP i.e., IDACORP and Connecticut Light go up and down completely randomly.
Pair Corralation between IDACORP and Connecticut Light
Considering the 90-day investment horizon IDACORP is expected to generate 0.4 times more return on investment than Connecticut Light. However, IDACORP is 2.53 times less risky than Connecticut Light. It trades about -0.11 of its potential returns per unit of risk. The Connecticut Light is currently generating about -0.06 per unit of risk. If you would invest 11,289 in IDACORP on October 11, 2024 and sell it today you would lose (246.00) from holding IDACORP or give up 2.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
IDACORP vs. The Connecticut Light
Performance |
| Timeline |
| IDACORP |
| Connecticut Light |
IDACORP and Connecticut Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IDACORP and Connecticut Light
The main advantage of trading using opposite IDACORP and Connecticut Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IDACORP 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.| IDACORP vs. CMS Energy | IDACORP vs. Pinnacle West Capital | IDACORP vs. Alliant Energy Corp | IDACORP vs. Portland General Electric |
| Connecticut Light vs. NH Foods Ltd | Connecticut Light vs. ServiceNow | Connecticut Light vs. Cadence Design Systems | Connecticut Light vs. Rackspace Technology |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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