Correlation Between NORTHEAST UTILITIES and ERSTE GP
Can any of the company-specific risk be diversified away by investing in both NORTHEAST UTILITIES and ERSTE GP 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 ERSTE GP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NORTHEAST UTILITIES and ERSTE GP BNK, you can compare the effects of market volatilities on NORTHEAST UTILITIES and ERSTE GP 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 ERSTE GP. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORTHEAST UTILITIES and ERSTE GP.
Diversification Opportunities for NORTHEAST UTILITIES and ERSTE GP
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NORTHEAST and ERSTE is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding NORTHEAST UTILITIES and ERSTE GP BNK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ERSTE GP BNK 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 ERSTE GP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ERSTE GP BNK has no effect on the direction of NORTHEAST UTILITIES i.e., NORTHEAST UTILITIES and ERSTE GP go up and down completely randomly.
Pair Corralation between NORTHEAST UTILITIES and ERSTE GP
Assuming the 90 days trading horizon NORTHEAST UTILITIES is expected to under-perform the ERSTE GP. But the stock apears to be less risky and, when comparing its historical volatility, NORTHEAST UTILITIES is 1.24 times less risky than ERSTE GP. The stock trades about -0.04 of its potential returns per unit of risk. The ERSTE GP BNK is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,500 in ERSTE GP BNK on August 29, 2024 and sell it today you would earn a total of 40.00 from holding ERSTE GP BNK or generate 1.6% 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. ERSTE GP BNK
Performance |
| Timeline |
| NORTHEAST UTILITIES |
| ERSTE GP BNK |
NORTHEAST UTILITIES and ERSTE GP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORTHEAST UTILITIES and ERSTE GP
The main advantage of trading using opposite NORTHEAST UTILITIES and ERSTE GP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORTHEAST UTILITIES position performs unexpectedly, ERSTE GP 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 ERSTE GP will offset losses from the drop in ERSTE GP's long position.| NORTHEAST UTILITIES vs. Norwegian Air Shuttle | NORTHEAST UTILITIES vs. MagnaChip Semiconductor Corp | NORTHEAST UTILITIES vs. WIZZ AIR HLDGUNSPADR4 | NORTHEAST UTILITIES vs. SWISS WATER DECAFFCOFFEE |
| ERSTE GP vs. NORTHEAST UTILITIES | ERSTE GP vs. STMicroelectronics NV | ERSTE GP vs. LGI Homes | ERSTE GP vs. BYD ELECTRONIC |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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