Correlation Between NORTHEAST UTILITIES and Rai Way
Can any of the company-specific risk be diversified away by investing in both NORTHEAST UTILITIES and Rai Way 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 NORTHEAST UTILITIES and Rai Way into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NORTHEAST UTILITIES and Rai Way SpA, you can compare the effects of market volatilities on NORTHEAST UTILITIES and Rai Way 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 NORTHEAST UTILITIES with a short position of Rai Way. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORTHEAST UTILITIES and Rai Way.
Diversification Opportunities for NORTHEAST UTILITIES and Rai Way
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NORTHEAST and Rai is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding NORTHEAST UTILITIES and Rai Way SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rai Way SpA and NORTHEAST UTILITIES 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 NORTHEAST UTILITIES are associated (or correlated) with Rai Way. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rai Way SpA has no effect on the direction of NORTHEAST UTILITIES i.e., NORTHEAST UTILITIES and Rai Way go up and down completely randomly.
Pair Corralation between NORTHEAST UTILITIES and Rai Way
Assuming the 90 days trading horizon NORTHEAST UTILITIES is expected to generate 2.45 times less return on investment than Rai Way. But when comparing it to its historical volatility, NORTHEAST UTILITIES is 1.11 times less risky than Rai Way. It trades about 0.01 of its potential returns per unit of risk. Rai Way SpA is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 497.00 in Rai Way SpA on September 4, 2024 and sell it today you would earn a total of 11.00 from holding Rai Way SpA or generate 2.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NORTHEAST UTILITIES vs. Rai Way SpA
Performance |
| Timeline |
| NORTHEAST UTILITIES |
| Rai Way SpA |
NORTHEAST UTILITIES and Rai Way Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORTHEAST UTILITIES and Rai Way
The main advantage of trading using opposite NORTHEAST UTILITIES and Rai Way positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORTHEAST UTILITIES position performs unexpectedly, Rai Way 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 Rai Way will offset losses from the drop in Rai Way's long position.| NORTHEAST UTILITIES vs. TOTAL GABON | NORTHEAST UTILITIES vs. Walgreens Boots Alliance | NORTHEAST UTILITIES vs. Peak Resources Limited |
| Rai Way vs. Chesapeake Utilities | Rai Way vs. Beijing Media | Rai Way vs. Townsquare Media | Rai Way vs. Universal Entertainment |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |