Correlation Between REINET INVESTMENTS and NORTHEAST UTILITIES
Can any of the company-specific risk be diversified away by investing in both REINET INVESTMENTS and NORTHEAST UTILITIES 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 REINET INVESTMENTS and NORTHEAST UTILITIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REINET INVESTMENTS SCA and NORTHEAST UTILITIES, you can compare the effects of market volatilities on REINET INVESTMENTS and NORTHEAST UTILITIES 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 REINET INVESTMENTS with a short position of NORTHEAST UTILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of REINET INVESTMENTS and NORTHEAST UTILITIES.
Diversification Opportunities for REINET INVESTMENTS and NORTHEAST UTILITIES
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between REINET and NORTHEAST is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding REINET INVESTMENTS SCA and NORTHEAST UTILITIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORTHEAST UTILITIES and REINET INVESTMENTS 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 REINET INVESTMENTS SCA are associated (or correlated) with NORTHEAST UTILITIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORTHEAST UTILITIES has no effect on the direction of REINET INVESTMENTS i.e., REINET INVESTMENTS and NORTHEAST UTILITIES go up and down completely randomly.
Pair Corralation between REINET INVESTMENTS and NORTHEAST UTILITIES
Assuming the 90 days horizon REINET INVESTMENTS is expected to generate 1.03 times less return on investment than NORTHEAST UTILITIES. In addition to that, REINET INVESTMENTS is 2.45 times more volatile than NORTHEAST UTILITIES. It trades about 0.03 of its total potential returns per unit of risk. NORTHEAST UTILITIES is currently generating about 0.07 per unit of volatility. If you would invest 5,533 in NORTHEAST UTILITIES on September 2, 2024 and sell it today you would earn a total of 517.00 from holding NORTHEAST UTILITIES or generate 9.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
REINET INVESTMENTS SCA vs. NORTHEAST UTILITIES
Performance |
| Timeline |
| REINET INVESTMENTS SCA |
| NORTHEAST UTILITIES |
REINET INVESTMENTS and NORTHEAST UTILITIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REINET INVESTMENTS and NORTHEAST UTILITIES
The main advantage of trading using opposite REINET INVESTMENTS and NORTHEAST UTILITIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REINET INVESTMENTS position performs unexpectedly, NORTHEAST UTILITIES 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 NORTHEAST UTILITIES will offset losses from the drop in NORTHEAST UTILITIES's long position.| REINET INVESTMENTS vs. Richardson Electronics | REINET INVESTMENTS vs. United Microelectronics Corp | REINET INVESTMENTS vs. MARKET VECTR RETAIL | REINET INVESTMENTS vs. AGF Management Limited |
| NORTHEAST UTILITIES vs. Playa Hotels Resorts | NORTHEAST UTILITIES vs. American Airlines Group | NORTHEAST UTILITIES vs. PLAYSTUDIOS A DL 0001 | NORTHEAST UTILITIES vs. Beijing Media |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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