Correlation Between Public Service and NSTAR Electric
Can any of the company-specific risk be diversified away by investing in both Public Service and NSTAR Electric 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 Public Service and NSTAR Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Public Service and NSTAR Electric, you can compare the effects of market volatilities on Public Service and NSTAR Electric 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 Public Service with a short position of NSTAR Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Service and NSTAR Electric.
Diversification Opportunities for Public Service and NSTAR Electric
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Public and NSTAR is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Public Service and NSTAR Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSTAR Electric and Public Service 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 Public Service are associated (or correlated) with NSTAR Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSTAR Electric has no effect on the direction of Public Service i.e., Public Service and NSTAR Electric go up and down completely randomly.
Pair Corralation between Public Service and NSTAR Electric
Assuming the 90 days horizon Public Service is expected to under-perform the NSTAR Electric. In addition to that, Public Service is 1.24 times more volatile than NSTAR Electric. It trades about -0.23 of its total potential returns per unit of risk. NSTAR Electric is currently generating about -0.08 per unit of volatility. If you would invest 7,200 in NSTAR Electric on October 11, 2024 and sell it today you would lose (100.00) from holding NSTAR Electric or give up 1.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Public Service vs. NSTAR Electric
Performance |
| Timeline |
| Public Service |
| NSTAR Electric |
Public Service and NSTAR Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Public Service and NSTAR Electric
The main advantage of trading using opposite Public Service and NSTAR Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Service position performs unexpectedly, NSTAR Electric 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 NSTAR Electric will offset losses from the drop in NSTAR Electric's long position.| Public Service vs. WK Kellogg Co | Public Service vs. Copperbank Resources Corp | Public Service vs. Astral Foods Limited | Public Service vs. Ingredion Incorporated |
| NSTAR Electric vs. GameStop Corp | NSTAR Electric vs. Paysafe | NSTAR Electric vs. Asure Software | NSTAR Electric vs. Take Two Interactive Software |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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