Correlation Between Sea and NorthWestern
Can any of the company-specific risk be diversified away by investing in both Sea and NorthWestern 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 Sea and NorthWestern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sea and NorthWestern, you can compare the effects of market volatilities on Sea and NorthWestern 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 Sea with a short position of NorthWestern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea and NorthWestern.
Diversification Opportunities for Sea and NorthWestern
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sea and NorthWestern is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sea and NorthWestern in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NorthWestern and Sea 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 Sea are associated (or correlated) with NorthWestern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NorthWestern has no effect on the direction of Sea i.e., Sea and NorthWestern go up and down completely randomly.
Pair Corralation between Sea and NorthWestern
Allowing for the 90-day total investment horizon Sea is expected to generate 2.71 times more return on investment than NorthWestern. However, Sea is 2.71 times more volatile than NorthWestern. It trades about 0.07 of its potential returns per unit of risk. NorthWestern is currently generating about 0.02 per unit of risk. If you would invest 5,860 in Sea on August 27, 2024 and sell it today you would earn a total of 5,444 from holding Sea or generate 92.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sea vs. NorthWestern
Performance |
| Timeline |
| Sea |
| NorthWestern |
Sea and NorthWestern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sea and NorthWestern
The main advantage of trading using opposite Sea and NorthWestern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea position performs unexpectedly, NorthWestern 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 NorthWestern will offset losses from the drop in NorthWestern's long position.| Sea vs. Atari SA | Sea vs. Victory Square Technologies | Sea vs. Motorsport Gaming Us | Sea vs. Alpha Esports Tech |
| NorthWestern vs. Allete Inc | NorthWestern vs. Black Hills | NorthWestern vs. Otter Tail | NorthWestern vs. Avista |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |