Correlation Between Consolidated Edison and MUTUIONLINE

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

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

Diversification Opportunities for Consolidated Edison and MUTUIONLINE

-0.44

Correlation Coefficient

Consolidated Edison  MUTUIONLINE

Very good diversification

The 3 months correlation between Consolidated and MUTUIONLINE is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Edison and MUTUIONLINE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MUTUIONLINE and Consolidated Edison 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 Consolidated Edison are associated (or correlated) with MUTUIONLINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MUTUIONLINE has no effect on the direction of Consolidated Edison i.e., Consolidated Edison and MUTUIONLINE go up and down completely randomly.

Pair Corralation between Consolidated Edison and MUTUIONLINE

Assuming the 90 days horizon Consolidated Edison is expected to under-perform the MUTUIONLINE. But the stock apears to be less risky and, when comparing its historical volatility, Consolidated Edison is 1.94 times less risky than MUTUIONLINE. The stock trades about -0.37 of its potential returns per unit of risk. The MUTUIONLINE is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,735  in MUTUIONLINE on October 9, 2024 and sell it today you would earn a total of  0.00  from holding MUTUIONLINE or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Consolidated Edison  vs.  MUTUIONLINE

Consolidated Edison

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Consolidated Edison has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

MUTUIONLINE

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MUTUIONLINE are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, MUTUIONLINE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Consolidated Edison and MUTUIONLINE

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

The idea behind Consolidated Edison and MUTUIONLINE 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.

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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .