Correlation Between Utilities Fund and Consolidated Edison
Can any of the company-specific risk be diversified away by investing in both Utilities Fund and Consolidated Edison 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 Utilities Fund and Consolidated Edison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Utilities Fund Class and Consolidated Edison, you can compare the effects of market volatilities on Utilities Fund and Consolidated Edison 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 Utilities Fund with a short position of Consolidated Edison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Utilities Fund and Consolidated Edison.
Diversification Opportunities for Utilities Fund and Consolidated Edison
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Utilities and Consolidated is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Utilities Fund Class and Consolidated Edison in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Edison and Utilities Fund 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 Utilities Fund Class are associated (or correlated) with Consolidated Edison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Edison has no effect on the direction of Utilities Fund i.e., Utilities Fund and Consolidated Edison go up and down completely randomly.
Pair Corralation between Utilities Fund and Consolidated Edison
Assuming the 90 days horizon Utilities Fund Class is expected to generate 0.86 times more return on investment than Consolidated Edison. However, Utilities Fund Class is 1.16 times less risky than Consolidated Edison. It trades about -0.07 of its potential returns per unit of risk. Consolidated Edison is currently generating about -0.13 per unit of risk. If you would invest 5,301 in Utilities Fund Class on September 12, 2024 and sell it today you would lose (72.00) from holding Utilities Fund Class or give up 1.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Utilities Fund Class vs. Consolidated Edison
Performance |
| Timeline |
| Utilities Fund Class |
| Consolidated Edison |
Utilities Fund and Consolidated Edison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Utilities Fund and Consolidated Edison
The main advantage of trading using opposite Utilities Fund and Consolidated Edison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Utilities Fund position performs unexpectedly, Consolidated Edison 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 Consolidated Edison will offset losses from the drop in Consolidated Edison's long position.| Utilities Fund vs. Alpine Dynamic Dividend | Utilities Fund vs. The Gabelli Utilities | Utilities Fund vs. The Gabelli Equity | Utilities Fund vs. Hennessy Gas Utility |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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