Correlation Between Eversource Energy and The Gabelli

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

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

Diversification Opportunities for Eversource Energy and The Gabelli

0.8

Correlation Coefficient

Eversource Energy  The Gabelli

Very poor diversification

The 3 months correlation between Eversource and The is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Eversource Energy and The Gabelli Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Utilities and Eversource Energy 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 Eversource Energy are associated (or correlated) with The Gabelli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Utilities has no effect on the direction of Eversource Energy i.e., Eversource Energy and The Gabelli go up and down completely randomly.

Pair Corralation between Eversource Energy and The Gabelli

Allowing for the 90-day total investment horizon Eversource Energy is expected to generate 1.92 times more return on investment than The Gabelli. However, Eversource Energy is 1.92 times more volatile than The Gabelli Utilities. It trades about 0.07 of its potential returns per unit of risk. The Gabelli Utilities is currently generating about 0.1 per unit of risk. If you would invest  5,664  in Eversource Energy on December 27, 2024 and sell it today you would earn a total of  366.00  from holding Eversource Energy or generate 6.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Eversource Energy  vs.  The Gabelli Utilities

Eversource Energy

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eversource Energy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Eversource Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Gabelli Utilities

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Utilities are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, The Gabelli is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eversource Energy and The Gabelli

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

The idea behind Eversource Energy and The Gabelli Utilities 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.