Correlation Between NorthWestern and AES Corp
Can any of the company-specific risk be diversified away by investing in both NorthWestern and AES Corp 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 NorthWestern and AES Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NorthWestern and AES Corp Unit, you can compare the effects of market volatilities on NorthWestern and AES Corp 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 NorthWestern with a short position of AES Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorthWestern and AES Corp.
Diversification Opportunities for NorthWestern and AES Corp
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NorthWestern and AES is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding NorthWestern and AES Corp Unit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AES Corp Unit and NorthWestern 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 NorthWestern are associated (or correlated) with AES Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AES Corp Unit has no effect on the direction of NorthWestern i.e., NorthWestern and AES Corp go up and down completely randomly.
Pair Corralation between NorthWestern and AES Corp
If you would invest 5,531 in NorthWestern on August 24, 2024 and sell it today you would earn a total of 120.00 from holding NorthWestern or generate 2.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.35% |
| Values | Daily Returns |
NorthWestern vs. AES Corp Unit
Performance |
| Timeline |
| NorthWestern |
| AES Corp Unit |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
NorthWestern and AES Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorthWestern and AES Corp
The main advantage of trading using opposite NorthWestern and AES Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorthWestern position performs unexpectedly, AES Corp 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 AES Corp will offset losses from the drop in AES Corp's long position.| NorthWestern vs. Allete Inc | NorthWestern vs. Black Hills | NorthWestern vs. Otter Tail | NorthWestern vs. Avista |
| AES Corp vs. The Cheesecake Factory | AES Corp vs. Dave Busters Entertainment | AES Corp vs. Omni Health | AES Corp vs. Amgen Inc |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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