Correlation Between NSTAR and Black Hills
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By analyzing existing cross correlation between NSTAR ELEC 44 and Black Hills, you can compare the effects of market volatilities on NSTAR and Black Hills 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 NSTAR with a short position of Black Hills. Check out your portfolio center. Please also check ongoing floating volatility patterns of NSTAR and Black Hills.
Diversification Opportunities for NSTAR and Black Hills
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NSTAR and Black is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding NSTAR ELEC 44 and Black Hills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Hills and NSTAR 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 NSTAR ELEC 44 are associated (or correlated) with Black Hills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Hills has no effect on the direction of NSTAR i.e., NSTAR and Black Hills go up and down completely randomly.
Pair Corralation between NSTAR and Black Hills
Assuming the 90 days trading horizon NSTAR ELEC 44 is expected to generate 86.81 times more return on investment than Black Hills. However, NSTAR is 86.81 times more volatile than Black Hills. It trades about 0.11 of its potential returns per unit of risk. Black Hills is currently generating about 0.01 per unit of risk. If you would invest 9,284 in NSTAR ELEC 44 on September 3, 2024 and sell it today you would lose (520.00) from holding NSTAR ELEC 44 or give up 5.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 28.08% |
| Values | Daily Returns |
NSTAR ELEC 44 vs. Black Hills
Performance |
| Timeline |
| NSTAR ELEC 44 |
| Black Hills |
NSTAR and Black Hills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NSTAR and Black Hills
The main advantage of trading using opposite NSTAR and Black Hills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NSTAR position performs unexpectedly, Black Hills 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 Black Hills will offset losses from the drop in Black Hills' long position.The idea behind NSTAR ELEC 44 and Black Hills pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Black Hills vs. NorthWestern | Black Hills vs. Avista | Black Hills vs. Otter Tail | Black Hills vs. Companhia Paranaense de |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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