Correlation Between NSTAR Electric and Pinnacle West
Can any of the company-specific risk be diversified away by investing in both NSTAR Electric and Pinnacle West 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 NSTAR Electric and Pinnacle West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NSTAR Electric and Pinnacle West Capital, you can compare the effects of market volatilities on NSTAR Electric and Pinnacle West 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 NSTAR Electric with a short position of Pinnacle West. Check out your portfolio center. Please also check ongoing floating volatility patterns of NSTAR Electric and Pinnacle West.
Diversification Opportunities for NSTAR Electric and Pinnacle West
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NSTAR and Pinnacle is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding NSTAR Electric and Pinnacle West Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinnacle West Capital and NSTAR Electric 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 NSTAR Electric are associated (or correlated) with Pinnacle West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinnacle West Capital has no effect on the direction of NSTAR Electric i.e., NSTAR Electric and Pinnacle West go up and down completely randomly.
Pair Corralation between NSTAR Electric and Pinnacle West
Assuming the 90 days horizon NSTAR Electric is expected to generate 0.9 times more return on investment than Pinnacle West. However, NSTAR Electric is 1.12 times less risky than Pinnacle West. It trades about -0.08 of its potential returns per unit of risk. Pinnacle West Capital is currently generating about -0.43 per unit of risk. If you would invest 7,200 in NSTAR Electric on October 11, 2024 and sell it today you would lose (100.00) from holding NSTAR Electric or give up 1.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NSTAR Electric vs. Pinnacle West Capital
Performance |
| Timeline |
| NSTAR Electric |
| Pinnacle West Capital |
NSTAR Electric and Pinnacle West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NSTAR Electric and Pinnacle West
The main advantage of trading using opposite NSTAR Electric and Pinnacle West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NSTAR Electric position performs unexpectedly, Pinnacle West 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 Pinnacle West will offset losses from the drop in Pinnacle West's long position.| NSTAR Electric vs. GameStop Corp | NSTAR Electric vs. Paysafe | NSTAR Electric vs. Asure Software | NSTAR Electric vs. Take Two Interactive Software |
| Pinnacle West vs. CMS Energy | Pinnacle West vs. Ameren Corp | Pinnacle West vs. MGE Energy | Pinnacle West vs. Evergy, |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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