Correlation Between NORTHEAST UTILITIES and Media
Can any of the company-specific risk be diversified away by investing in both NORTHEAST UTILITIES and Media 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 Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NORTHEAST UTILITIES and Media and Games, you can compare the effects of market volatilities on NORTHEAST UTILITIES and Media 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 Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORTHEAST UTILITIES and Media.
Diversification Opportunities for NORTHEAST UTILITIES and Media
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NORTHEAST and Media is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding NORTHEAST UTILITIES and Media and Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Media and Games 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 Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Media and Games has no effect on the direction of NORTHEAST UTILITIES i.e., NORTHEAST UTILITIES and Media go up and down completely randomly.
Pair Corralation between NORTHEAST UTILITIES and Media
Assuming the 90 days trading horizon NORTHEAST UTILITIES is expected to under-perform the Media. But the stock apears to be less risky and, when comparing its historical volatility, NORTHEAST UTILITIES is 2.75 times less risky than Media. The stock trades about -0.02 of its potential returns per unit of risk. The Media and Games is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 175.00 in Media and Games on September 3, 2024 and sell it today you would earn a total of 178.00 from holding Media and Games or generate 101.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NORTHEAST UTILITIES vs. Media and Games
Performance |
| Timeline |
| NORTHEAST UTILITIES |
| Media and Games |
NORTHEAST UTILITIES and Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORTHEAST UTILITIES and Media
The main advantage of trading using opposite NORTHEAST UTILITIES and Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORTHEAST UTILITIES position performs unexpectedly, Media 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 Media will offset losses from the drop in Media's long position.| NORTHEAST UTILITIES vs. TOTAL GABON | NORTHEAST UTILITIES vs. Walgreens Boots Alliance | NORTHEAST UTILITIES vs. Peak Resources Limited |
| Media vs. Rocket Internet SE | Media vs. Superior Plus Corp | Media vs. NMI Holdings | Media vs. Origin Agritech |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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