Correlation Between Connecticut Light and Envista Holdings

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

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

Diversification Opportunities for Connecticut Light and Envista Holdings

-0.08

Correlation Coefficient

Connecticut Light  Envista Holdings

Good diversification

The 3 months correlation between Connecticut and Envista is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding The Connecticut Light and Envista Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Envista Holdings Corp and Connecticut Light 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 The Connecticut Light are associated (or correlated) with Envista Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Envista Holdings Corp has no effect on the direction of Connecticut Light i.e., Connecticut Light and Envista Holdings go up and down completely randomly.

Pair Corralation between Connecticut Light and Envista Holdings

Assuming the 90 days horizon The Connecticut Light is expected to generate 0.44 times more return on investment than Envista Holdings. However, The Connecticut Light is 2.26 times less risky than Envista Holdings. It trades about 0.07 of its potential returns per unit of risk. Envista Holdings Corp is currently generating about -0.07 per unit of risk. If you would invest  3,210  in The Connecticut Light on December 22, 2024 and sell it today you would earn a total of  115.00  from holding The Connecticut Light or generate 3.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.52%
Values	Daily Returns

The Connecticut Light  vs.  Envista Holdings Corp

Connecticut Light

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Connecticut Light are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Connecticut Light is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Envista Holdings Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Envista Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Connecticut Light and Envista Holdings

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

The idea behind The Connecticut Light and Envista Holdings Corp 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.