Correlation Between NORTHEAST UTILITIES and SP Global
Can any of the company-specific risk be diversified away by investing in both NORTHEAST UTILITIES and SP Global 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 SP Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NORTHEAST UTILITIES and SP Global, you can compare the effects of market volatilities on NORTHEAST UTILITIES and SP Global 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 SP Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORTHEAST UTILITIES and SP Global.
Diversification Opportunities for NORTHEAST UTILITIES and SP Global
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between NORTHEAST and MHL is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding NORTHEAST UTILITIES and SP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP Global 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 SP Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP Global has no effect on the direction of NORTHEAST UTILITIES i.e., NORTHEAST UTILITIES and SP Global go up and down completely randomly.
Pair Corralation between NORTHEAST UTILITIES and SP Global
Assuming the 90 days trading horizon NORTHEAST UTILITIES is expected to under-perform the SP Global. In addition to that, NORTHEAST UTILITIES is 1.14 times more volatile than SP Global. It trades about -0.02 of its total potential returns per unit of risk. SP Global is currently generating about 0.06 per unit of volatility. If you would invest 33,724 in SP Global on October 29, 2024 and sell it today you would earn a total of 15,011 from holding SP Global or generate 44.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
NORTHEAST UTILITIES vs. SP Global
Performance |
| Timeline |
| NORTHEAST UTILITIES |
| SP Global |
NORTHEAST UTILITIES and SP Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORTHEAST UTILITIES and SP Global
The main advantage of trading using opposite NORTHEAST UTILITIES and SP Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORTHEAST UTILITIES position performs unexpectedly, SP Global 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 SP Global will offset losses from the drop in SP Global's long position.| NORTHEAST UTILITIES vs. FAST RETAIL ADR | NORTHEAST UTILITIES vs. ECHO INVESTMENT ZY | NORTHEAST UTILITIES vs. Apollo Investment Corp | NORTHEAST UTILITIES vs. AEON STORES |
| SP Global vs. Morgan Stanley | SP Global vs. Superior Plus Corp | SP Global vs. Origin Agritech | SP Global vs. Identiv |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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