Correlation Between CarsalesCom and NORTHEAST UTILITIES
Can any of the company-specific risk be diversified away by investing in both CarsalesCom and NORTHEAST UTILITIES 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 CarsalesCom and NORTHEAST UTILITIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarsalesCom and NORTHEAST UTILITIES, you can compare the effects of market volatilities on CarsalesCom and NORTHEAST UTILITIES 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 CarsalesCom with a short position of NORTHEAST UTILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of CarsalesCom and NORTHEAST UTILITIES.
Diversification Opportunities for CarsalesCom and NORTHEAST UTILITIES
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between CarsalesCom and NORTHEAST is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom and NORTHEAST UTILITIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORTHEAST UTILITIES and CarsalesCom 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 CarsalesCom are associated (or correlated) with NORTHEAST UTILITIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORTHEAST UTILITIES has no effect on the direction of CarsalesCom i.e., CarsalesCom and NORTHEAST UTILITIES go up and down completely randomly.
Pair Corralation between CarsalesCom and NORTHEAST UTILITIES
Assuming the 90 days horizon CarsalesCom is expected to generate 1.17 times more return on investment than NORTHEAST UTILITIES. However, CarsalesCom is 1.17 times more volatile than NORTHEAST UTILITIES. It trades about -0.01 of its potential returns per unit of risk. NORTHEAST UTILITIES is currently generating about -0.11 per unit of risk. If you would invest 2,260 in CarsalesCom on September 29, 2024 and sell it today you would lose (40.00) from holding CarsalesCom or give up 1.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CarsalesCom vs. NORTHEAST UTILITIES
Performance |
| Timeline |
| CarsalesCom |
| NORTHEAST UTILITIES |
CarsalesCom and NORTHEAST UTILITIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CarsalesCom and NORTHEAST UTILITIES
The main advantage of trading using opposite CarsalesCom and NORTHEAST UTILITIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CarsalesCom position performs unexpectedly, NORTHEAST UTILITIES 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 NORTHEAST UTILITIES will offset losses from the drop in NORTHEAST UTILITIES's long position.| CarsalesCom vs. Alphabet | CarsalesCom vs. Meta Platforms | CarsalesCom vs. Meta Platforms | CarsalesCom vs. AIRBNB INC DL 01 |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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