Correlation Between Talon Energy and Connecticut Light
Can any of the company-specific risk be diversified away by investing in both Talon Energy and Connecticut Light 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 Talon Energy and Connecticut Light into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Talon Energy and The Connecticut Light, you can compare the effects of market volatilities on Talon Energy and Connecticut Light 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 Talon Energy with a short position of Connecticut Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talon Energy and Connecticut Light.
Diversification Opportunities for Talon Energy and Connecticut Light
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Talon and Connecticut is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Talon Energy and The Connecticut Light in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Connecticut Light and Talon 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 Talon Energy are associated (or correlated) with Connecticut Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Connecticut Light has no effect on the direction of Talon Energy i.e., Talon Energy and Connecticut Light go up and down completely randomly.
Pair Corralation between Talon Energy and Connecticut Light
If you would invest 5.00 in Talon Energy on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Talon Energy or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Talon Energy vs. The Connecticut Light
Performance |
| Timeline |
| Talon Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Connecticut Light |
Talon Energy and Connecticut Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Talon Energy and Connecticut Light
The main advantage of trading using opposite Talon Energy and Connecticut Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Talon Energy position performs unexpectedly, Connecticut Light 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 Connecticut Light will offset losses from the drop in Connecticut Light's long position.| Talon Energy vs. Datadog | Talon Energy vs. Cabo Drilling Corp | Talon Energy vs. Seadrill Limited | Talon Energy vs. Awilco Drilling PLC |
| Connecticut Light vs. Southern Company | Connecticut Light vs. Duke Energy | Connecticut Light vs. Duke Energy | Connecticut Light vs. National Grid PLC |
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 Stocks Directory module to find actively traded stocks across global markets.
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