Correlation Between Vertiv Holdings and NSTAR Electric
Can any of the company-specific risk be diversified away by investing in both Vertiv Holdings and NSTAR Electric 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 Vertiv Holdings and NSTAR Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vertiv Holdings Co and NSTAR Electric, you can compare the effects of market volatilities on Vertiv Holdings and NSTAR Electric 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 Vertiv Holdings with a short position of NSTAR Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vertiv Holdings and NSTAR Electric.
Diversification Opportunities for Vertiv Holdings and NSTAR Electric
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vertiv and NSTAR is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Vertiv Holdings Co and NSTAR Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSTAR Electric and Vertiv Holdings 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 Vertiv Holdings Co are associated (or correlated) with NSTAR Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSTAR Electric has no effect on the direction of Vertiv Holdings i.e., Vertiv Holdings and NSTAR Electric go up and down completely randomly.
Pair Corralation between Vertiv Holdings and NSTAR Electric
If you would invest 10,690 in Vertiv Holdings Co on September 2, 2024 and sell it today you would earn a total of 2,070 from holding Vertiv Holdings Co or generate 19.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vertiv Holdings Co vs. NSTAR Electric
Performance |
| Timeline |
| Vertiv Holdings |
| NSTAR Electric |
Vertiv Holdings and NSTAR Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vertiv Holdings and NSTAR Electric
The main advantage of trading using opposite Vertiv Holdings and NSTAR Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vertiv Holdings position performs unexpectedly, NSTAR Electric 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 NSTAR Electric will offset losses from the drop in NSTAR Electric's long position.| Vertiv Holdings vs. nVent Electric PLC | Vertiv Holdings vs. Hubbell | Vertiv Holdings vs. Advanced Energy Industries | Vertiv Holdings vs. Energizer Holdings |
| NSTAR Electric vs. Southern Company | NSTAR Electric vs. Duke Energy | NSTAR Electric vs. Duke Energy | NSTAR Electric 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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