Correlation Between Eversource Energy and CEZ A
Can any of the company-specific risk be diversified away by investing in both Eversource Energy and CEZ A 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 Eversource Energy and CEZ A into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eversource Energy and CEZ a s, you can compare the effects of market volatilities on Eversource Energy and CEZ A 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 Eversource Energy with a short position of CEZ A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eversource Energy and CEZ A.
Diversification Opportunities for Eversource Energy and CEZ A
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eversource and CEZ is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Eversource Energy and CEZ a s in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEZ a s and Eversource Energy 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 Eversource Energy are associated (or correlated) with CEZ A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEZ a s has no effect on the direction of Eversource Energy i.e., Eversource Energy and CEZ A go up and down completely randomly.
Pair Corralation between Eversource Energy and CEZ A
Assuming the 90 days horizon Eversource Energy is expected to under-perform the CEZ A. In addition to that, Eversource Energy is 1.01 times more volatile than CEZ a s. It trades about -0.02 of its total potential returns per unit of risk. CEZ a s is currently generating about 0.06 per unit of volatility. If you would invest 2,537 in CEZ a s on August 27, 2024 and sell it today you would earn a total of 1,181 from holding CEZ a s or generate 46.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eversource Energy vs. CEZ a s
Performance |
| Timeline |
| Eversource Energy |
| CEZ a s |
Eversource Energy and CEZ A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eversource Energy and CEZ A
The main advantage of trading using opposite Eversource Energy and CEZ A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eversource Energy position performs unexpectedly, CEZ A 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 CEZ A will offset losses from the drop in CEZ A's long position.| Eversource Energy vs. NextEra Energy | Eversource Energy vs. The Southern | Eversource Energy vs. VERBUND AG | Eversource Energy vs. American Electric Power |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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