Correlation Between NORTHEAST UTILITIES and KUBOTA P
Can any of the company-specific risk be diversified away by investing in both NORTHEAST UTILITIES and KUBOTA P 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 KUBOTA P into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NORTHEAST UTILITIES and KUBOTA P ADR20, you can compare the effects of market volatilities on NORTHEAST UTILITIES and KUBOTA P 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 KUBOTA P. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORTHEAST UTILITIES and KUBOTA P.
Diversification Opportunities for NORTHEAST UTILITIES and KUBOTA P
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NORTHEAST and KUBOTA is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding NORTHEAST UTILITIES and KUBOTA P ADR20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KUBOTA P ADR20 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 KUBOTA P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KUBOTA P ADR20 has no effect on the direction of NORTHEAST UTILITIES i.e., NORTHEAST UTILITIES and KUBOTA P go up and down completely randomly.
Pair Corralation between NORTHEAST UTILITIES and KUBOTA P
Assuming the 90 days trading horizon NORTHEAST UTILITIES is expected to generate 0.78 times more return on investment than KUBOTA P. However, NORTHEAST UTILITIES is 1.28 times less risky than KUBOTA P. It trades about 0.04 of its potential returns per unit of risk. KUBOTA P ADR20 is currently generating about -0.01 per unit of risk. If you would invest 5,041 in NORTHEAST UTILITIES on September 15, 2024 and sell it today you would earn a total of 659.00 from holding NORTHEAST UTILITIES or generate 13.07% 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. KUBOTA P ADR20
Performance |
| Timeline |
| NORTHEAST UTILITIES |
| KUBOTA P ADR20 |
NORTHEAST UTILITIES and KUBOTA P Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORTHEAST UTILITIES and KUBOTA P
The main advantage of trading using opposite NORTHEAST UTILITIES and KUBOTA P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORTHEAST UTILITIES position performs unexpectedly, KUBOTA P 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 KUBOTA P will offset losses from the drop in KUBOTA P's long position.| NORTHEAST UTILITIES vs. Apple Inc | NORTHEAST UTILITIES vs. Apple Inc | NORTHEAST UTILITIES vs. Apple Inc | NORTHEAST UTILITIES vs. Apple Inc |
| KUBOTA P vs. Hitachi Construction Machinery | KUBOTA P vs. Superior Plus Corp | KUBOTA P vs. SIVERS SEMICONDUCTORS AB | KUBOTA P vs. NorAm Drilling AS |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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