Correlation Between NORTHEAST UTILITIES and WT OFFSHORE
Can any of the company-specific risk be diversified away by investing in both NORTHEAST UTILITIES and WT OFFSHORE 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 WT OFFSHORE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NORTHEAST UTILITIES and WT OFFSHORE, you can compare the effects of market volatilities on NORTHEAST UTILITIES and WT OFFSHORE 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 WT OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORTHEAST UTILITIES and WT OFFSHORE.
Diversification Opportunities for NORTHEAST UTILITIES and WT OFFSHORE
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NORTHEAST and UWV is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding NORTHEAST UTILITIES and WT OFFSHORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WT OFFSHORE 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 WT OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WT OFFSHORE has no effect on the direction of NORTHEAST UTILITIES i.e., NORTHEAST UTILITIES and WT OFFSHORE go up and down completely randomly.
Pair Corralation between NORTHEAST UTILITIES and WT OFFSHORE
Assuming the 90 days trading horizon NORTHEAST UTILITIES is expected to generate 0.47 times more return on investment than WT OFFSHORE. However, NORTHEAST UTILITIES is 2.12 times less risky than WT OFFSHORE. It trades about 0.0 of its potential returns per unit of risk. WT OFFSHORE is currently generating about -0.05 per unit of risk. If you would invest 6,472 in NORTHEAST UTILITIES on August 31, 2024 and sell it today you would lose (372.00) from holding NORTHEAST UTILITIES or give up 5.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NORTHEAST UTILITIES vs. WT OFFSHORE
Performance |
| Timeline |
| NORTHEAST UTILITIES |
| WT OFFSHORE |
NORTHEAST UTILITIES and WT OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORTHEAST UTILITIES and WT OFFSHORE
The main advantage of trading using opposite NORTHEAST UTILITIES and WT OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORTHEAST UTILITIES position performs unexpectedly, WT OFFSHORE 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 WT OFFSHORE will offset losses from the drop in WT OFFSHORE's long position.| NORTHEAST UTILITIES vs. STRAYER EDUCATION | NORTHEAST UTILITIES vs. REINET INVESTMENTS SCA | NORTHEAST UTILITIES vs. Virtus Investment Partners | NORTHEAST UTILITIES vs. Apollo Investment Corp |
| WT OFFSHORE vs. Diamyd Medical AB | WT OFFSHORE vs. Micron Technology | WT OFFSHORE vs. Align Technology | WT OFFSHORE vs. AVITA Medical |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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