Correlation Between NORTHEAST UTILITIES and Corporate Office
Can any of the company-specific risk be diversified away by investing in both NORTHEAST UTILITIES and Corporate Office 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 Corporate Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NORTHEAST UTILITIES and Corporate Office Properties, you can compare the effects of market volatilities on NORTHEAST UTILITIES and Corporate Office 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 Corporate Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORTHEAST UTILITIES and Corporate Office.
Diversification Opportunities for NORTHEAST UTILITIES and Corporate Office
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between NORTHEAST and Corporate is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding NORTHEAST UTILITIES and Corporate Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporate Office Pro 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 Corporate Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporate Office Pro has no effect on the direction of NORTHEAST UTILITIES i.e., NORTHEAST UTILITIES and Corporate Office go up and down completely randomly.
Pair Corralation between NORTHEAST UTILITIES and Corporate Office
Assuming the 90 days trading horizon NORTHEAST UTILITIES is expected to generate 0.93 times more return on investment than Corporate Office. However, NORTHEAST UTILITIES is 1.07 times less risky than Corporate Office. It trades about -0.09 of its potential returns per unit of risk. Corporate Office Properties is currently generating about -0.26 per unit of risk. If you would invest 5,627 in NORTHEAST UTILITIES on October 12, 2024 and sell it today you would lose (127.00) from holding NORTHEAST UTILITIES or give up 2.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
NORTHEAST UTILITIES vs. Corporate Office Properties
Performance |
| Timeline |
| NORTHEAST UTILITIES |
| Corporate Office Pro |
NORTHEAST UTILITIES and Corporate Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORTHEAST UTILITIES and Corporate Office
The main advantage of trading using opposite NORTHEAST UTILITIES and Corporate Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORTHEAST UTILITIES position performs unexpectedly, Corporate Office 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 Corporate Office will offset losses from the drop in Corporate Office's long position.| NORTHEAST UTILITIES vs. Apple Inc | NORTHEAST UTILITIES vs. Apple Inc | NORTHEAST UTILITIES vs. Apple Inc | NORTHEAST UTILITIES vs. Apple Inc |
| Corporate Office vs. Semiconductor Manufacturing International | Corporate Office vs. NORTHEAST UTILITIES | Corporate Office vs. ELMOS SEMICONDUCTOR | Corporate Office vs. Samsung Electronics Co |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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