Correlation Between Income Growth and AVANGRID

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

By analyzing existing cross correlation between Income Growth Fund and AVANGRID INC, you can compare the effects of market volatilities on Income Growth and AVANGRID 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 Income Growth with a short position of AVANGRID. Check out your portfolio center. Please also check ongoing floating volatility patterns of Income Growth and AVANGRID.

Diversification Opportunities for Income Growth and AVANGRID

-0.02

Correlation Coefficient

Income Growth  AVANGRID

Good diversification

The 3 months correlation between Income and AVANGRID is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Income Growth Fund and AVANGRID INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVANGRID INC and Income Growth 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 Income Growth Fund are associated (or correlated) with AVANGRID. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVANGRID INC has no effect on the direction of Income Growth i.e., Income Growth and AVANGRID go up and down completely randomly.

Pair Corralation between Income Growth and AVANGRID

Assuming the 90 days horizon Income Growth Fund is expected to under-perform the AVANGRID. In addition to that, Income Growth is 1.16 times more volatile than AVANGRID INC. It trades about -0.13 of its total potential returns per unit of risk. AVANGRID INC is currently generating about -0.12 per unit of volatility. If you would invest  9,949  in AVANGRID INC on November 29, 2024 and sell it today you would lose (381.00) from holding AVANGRID INC or give up 3.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.14%
Values	Daily Returns

Income Growth Fund  vs.  AVANGRID INC

Income Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Income Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Income Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

AVANGRID INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days AVANGRID INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, AVANGRID is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Income Growth and AVANGRID

The main advantage of trading using opposite Income Growth and AVANGRID positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Income Growth position performs unexpectedly, AVANGRID 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 AVANGRID will offset losses from the drop in AVANGRID's long position.

The idea behind Income Growth Fund and AVANGRID INC 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..