Correlation Between IONQ and NSTAR Electric
Can any of the company-specific risk be diversified away by investing in both IONQ and NSTAR Electric 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 IONQ and NSTAR Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IONQ Inc and NSTAR Electric, you can compare the effects of market volatilities on IONQ and NSTAR Electric 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 IONQ with a short position of NSTAR Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of IONQ and NSTAR Electric.
Diversification Opportunities for IONQ and NSTAR Electric
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IONQ and NSTAR is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding IONQ Inc and NSTAR Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSTAR Electric and IONQ 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 IONQ Inc are associated (or correlated) with NSTAR Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSTAR Electric has no effect on the direction of IONQ i.e., IONQ and NSTAR Electric go up and down completely randomly.
Pair Corralation between IONQ and NSTAR Electric
If you would invest 1,485 in IONQ Inc on September 2, 2024 and sell it today you would earn a total of 2,165 from holding IONQ Inc or generate 145.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IONQ Inc vs. NSTAR Electric
Performance |
| Timeline |
| IONQ Inc |
| NSTAR Electric |
IONQ and NSTAR Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IONQ and NSTAR Electric
The main advantage of trading using opposite IONQ and NSTAR Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IONQ position performs unexpectedly, NSTAR Electric 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 NSTAR Electric will offset losses from the drop in NSTAR Electric's long position.The idea behind IONQ Inc and NSTAR Electric pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| NSTAR Electric vs. Southern Company | NSTAR Electric vs. Duke Energy | NSTAR Electric vs. Duke Energy | NSTAR Electric 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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