Correlation Between Avangrid and Connecticut Light

Can any of the company-specific risk be diversified away by investing in both Avangrid 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 Avangrid and Connecticut Light into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Avangrid and The Connecticut Light, you can compare the effects of market volatilities on Avangrid 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 Avangrid with a short position of Connecticut Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avangrid and Connecticut Light.

Diversification Opportunities for Avangrid and Connecticut Light

0.0

Correlation Coefficient

Avangrid  Connecticut Light

Pay attention - limited upside

The 3 months correlation between Avangrid and Connecticut is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Avangrid and The Connecticut Light in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Connecticut Light and Avangrid 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 Avangrid 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 Avangrid i.e., Avangrid and Connecticut Light go up and down completely randomly.

Pair Corralation between Avangrid and Connecticut Light

If you would invest  3,153  in The Connecticut Light on December 30, 2024 and sell it today you would earn a total of  47.00  from holding The Connecticut Light or generate 1.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Avangrid  vs.  The Connecticut Light

Avangrid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Avangrid has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Avangrid is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Connecticut Light

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Connecticut Light are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Connecticut Light is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Avangrid and Connecticut Light

The main advantage of trading using opposite Avangrid and Connecticut Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avangrid 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.

The idea behind Avangrid and The Connecticut Light 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..