Correlation Between Niagara Mohawk and Global E
Can any of the company-specific risk be diversified away by investing in both Niagara Mohawk and Global E 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 Niagara Mohawk and Global E into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Niagara Mohawk Power and Global E Online, you can compare the effects of market volatilities on Niagara Mohawk and Global E 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 Niagara Mohawk with a short position of Global E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Niagara Mohawk and Global E.
Diversification Opportunities for Niagara Mohawk and Global E
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Niagara and Global is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Niagara Mohawk Power and Global E Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global E Online and Niagara Mohawk 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 Niagara Mohawk Power are associated (or correlated) with Global E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global E Online has no effect on the direction of Niagara Mohawk i.e., Niagara Mohawk and Global E go up and down completely randomly.
Pair Corralation between Niagara Mohawk and Global E
Assuming the 90 days horizon Niagara Mohawk is expected to generate 7.79 times less return on investment than Global E. But when comparing it to its historical volatility, Niagara Mohawk Power is 1.37 times less risky than Global E. It trades about 0.01 of its potential returns per unit of risk. Global E Online is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,275 in Global E Online on September 4, 2024 and sell it today you would earn a total of 2,960 from holding Global E Online or generate 130.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Niagara Mohawk Power vs. Global E Online
Performance |
| Timeline |
| Niagara Mohawk Power |
| Global E Online |
Niagara Mohawk and Global E Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Niagara Mohawk and Global E
The main advantage of trading using opposite Niagara Mohawk and Global E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Niagara Mohawk position performs unexpectedly, Global E 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 Global E will offset losses from the drop in Global E's long position.| Niagara Mohawk vs. Teleflex Incorporated | Niagara Mohawk vs. HUTCHMED DRC | Niagara Mohawk vs. Amgen Inc | Niagara Mohawk vs. Radcom |
| Global E vs. MercadoLibre | Global E vs. PDD Holdings | Global E vs. JD Inc Adr | Global E vs. Alibaba Group Holding |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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