Correlation Between NORTHEAST UTILITIES and Apple
Can any of the company-specific risk be diversified away by investing in both NORTHEAST UTILITIES and Apple 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 Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NORTHEAST UTILITIES and Apple Inc, you can compare the effects of market volatilities on NORTHEAST UTILITIES and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORTHEAST UTILITIES and Apple.
Diversification Opportunities for NORTHEAST UTILITIES and Apple
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NORTHEAST and Apple is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding NORTHEAST UTILITIES and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of NORTHEAST UTILITIES i.e., NORTHEAST UTILITIES and Apple go up and down completely randomly.
Pair Corralation between NORTHEAST UTILITIES and Apple
Assuming the 90 days trading horizon NORTHEAST UTILITIES is expected to generate 6.78 times less return on investment than Apple. But when comparing it to its historical volatility, NORTHEAST UTILITIES is 1.18 times less risky than Apple. It trades about 0.02 of its potential returns per unit of risk. Apple Inc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 17,629 in Apple Inc on October 19, 2024 and sell it today you would earn a total of 4,701 from holding Apple Inc or generate 26.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NORTHEAST UTILITIES vs. Apple Inc
Performance |
| Timeline |
| NORTHEAST UTILITIES |
| Apple Inc |
NORTHEAST UTILITIES and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORTHEAST UTILITIES and Apple
The main advantage of trading using opposite NORTHEAST UTILITIES and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORTHEAST UTILITIES position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| NORTHEAST UTILITIES vs. SBI Insurance Group | NORTHEAST UTILITIES vs. Japan Post Insurance | NORTHEAST UTILITIES vs. CEOTRONICS | NORTHEAST UTILITIES vs. UNIQA INSURANCE GR |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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