Correlation Between FactSet Research and AVANGRID

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

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

Diversification Opportunities for FactSet Research and AVANGRID

-0.4

Correlation Coefficient

FactSet Research  AVANGRID

Very good diversification

The 3 months correlation between FactSet and AVANGRID is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding FactSet Research Systems and AVANGRID INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVANGRID INC and FactSet Research 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 FactSet Research Systems 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 FactSet Research i.e., FactSet Research and AVANGRID go up and down completely randomly.

Pair Corralation between FactSet Research and AVANGRID

Considering the 90-day investment horizon FactSet Research Systems is expected to under-perform the AVANGRID. In addition to that, FactSet Research is 9.86 times more volatile than AVANGRID INC. It trades about -0.05 of its total potential returns per unit of risk. AVANGRID INC is currently generating about 0.04 per unit of volatility. If you would invest  9,934  in AVANGRID INC on November 20, 2024 and sell it today you would earn a total of  24.00  from holding AVANGRID INC or generate 0.24% return on investment over 90 days.

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

FactSet Research Systems  vs.  AVANGRID INC

FactSet Research Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days FactSet Research Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, FactSet Research is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

AVANGRID INC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AVANGRID INC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, AVANGRID is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FactSet Research and AVANGRID

The main advantage of trading using opposite FactSet Research and AVANGRID positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FactSet Research 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 FactSet Research Systems 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.