Correlation Between IDACORP and Eversource Energy
Can any of the company-specific risk be diversified away by investing in both IDACORP and Eversource Energy 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 Eversource Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IDACORP and Eversource Energy, you can compare the effects of market volatilities on IDACORP and Eversource Energy 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 Eversource Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of IDACORP and Eversource Energy.
Diversification Opportunities for IDACORP and Eversource Energy
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IDACORP and Eversource is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding IDACORP and Eversource Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eversource Energy 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 Eversource Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eversource Energy has no effect on the direction of IDACORP i.e., IDACORP and Eversource Energy go up and down completely randomly.
Pair Corralation between IDACORP and Eversource Energy
Considering the 90-day investment horizon IDACORP is expected to generate 0.78 times more return on investment than Eversource Energy. However, IDACORP is 1.28 times less risky than Eversource Energy. It trades about 0.03 of its potential returns per unit of risk. Eversource Energy is currently generating about -0.02 per unit of risk. If you would invest 10,113 in IDACORP on August 30, 2024 and sell it today you would earn a total of 1,761 from holding IDACORP or generate 17.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IDACORP vs. Eversource Energy
Performance |
| Timeline |
| IDACORP |
| Eversource Energy |
IDACORP and Eversource Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IDACORP and Eversource Energy
The main advantage of trading using opposite IDACORP and Eversource Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IDACORP position performs unexpectedly, Eversource Energy 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 Eversource Energy will offset losses from the drop in Eversource Energy's long position.| IDACORP vs. CMS Energy | IDACORP vs. Pinnacle West Capital | IDACORP vs. Alliant Energy Corp | IDACORP vs. Portland General Electric |
| Eversource Energy vs. CenterPoint Energy | Eversource Energy vs. FirstEnergy | Eversource Energy vs. Pinnacle West Capital | Eversource Energy vs. Edison International |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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