Correlation Between NORTHEAST UTILITIES and PATRIOT BATTERY
Can any of the company-specific risk be diversified away by investing in both NORTHEAST UTILITIES and PATRIOT BATTERY 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 PATRIOT BATTERY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NORTHEAST UTILITIES and PATRIOT BATTERY METINC, you can compare the effects of market volatilities on NORTHEAST UTILITIES and PATRIOT BATTERY 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 PATRIOT BATTERY. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORTHEAST UTILITIES and PATRIOT BATTERY.
Diversification Opportunities for NORTHEAST UTILITIES and PATRIOT BATTERY
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NORTHEAST and PATRIOT is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding NORTHEAST UTILITIES and PATRIOT BATTERY METINC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PATRIOT BATTERY METINC 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 PATRIOT BATTERY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PATRIOT BATTERY METINC has no effect on the direction of NORTHEAST UTILITIES i.e., NORTHEAST UTILITIES and PATRIOT BATTERY go up and down completely randomly.
Pair Corralation between NORTHEAST UTILITIES and PATRIOT BATTERY
Assuming the 90 days trading horizon NORTHEAST UTILITIES is expected to generate 0.15 times more return on investment than PATRIOT BATTERY. However, NORTHEAST UTILITIES is 6.69 times less risky than PATRIOT BATTERY. It trades about 0.21 of its potential returns per unit of risk. PATRIOT BATTERY METINC is currently generating about -0.05 per unit of risk. If you would invest 5,800 in NORTHEAST UTILITIES on September 4, 2024 and sell it today you would earn a total of 250.00 from holding NORTHEAST UTILITIES or generate 4.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
NORTHEAST UTILITIES vs. PATRIOT BATTERY METINC
Performance |
| Timeline |
| NORTHEAST UTILITIES |
| PATRIOT BATTERY METINC |
NORTHEAST UTILITIES and PATRIOT BATTERY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORTHEAST UTILITIES and PATRIOT BATTERY
The main advantage of trading using opposite NORTHEAST UTILITIES and PATRIOT BATTERY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORTHEAST UTILITIES position performs unexpectedly, PATRIOT BATTERY 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 PATRIOT BATTERY will offset losses from the drop in PATRIOT BATTERY's long position.| NORTHEAST UTILITIES vs. TOTAL GABON | NORTHEAST UTILITIES vs. Walgreens Boots Alliance | NORTHEAST UTILITIES vs. Peak Resources Limited |
| PATRIOT BATTERY vs. LION ONE METALS | PATRIOT BATTERY vs. EEDUCATION ALBERT AB | PATRIOT BATTERY vs. ADRIATIC METALS LS 013355 | PATRIOT BATTERY vs. Jacquet Metal Service |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |