Correlation Between HE Equipment and 629377CE0

Can any of the company-specific risk be diversified away by investing in both HE Equipment and 629377CE0 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 HE Equipment and 629377CE0 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HE Equipment Services and NRG Energy 575, you can compare the effects of market volatilities on HE Equipment and 629377CE0 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 HE Equipment with a short position of 629377CE0. Check out your portfolio center. Please also check ongoing floating volatility patterns of HE Equipment and 629377CE0.

Diversification Opportunities for HE Equipment and 629377CE0

0.42

Correlation Coefficient

HE Equipment  629377CE0

Very weak diversification

The 3 months correlation between HEES and 629377CE0 is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding HE Equipment Services and NRG Energy 575 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRG Energy 575 and HE Equipment 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 HE Equipment Services are associated (or correlated) with 629377CE0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NRG Energy 575 has no effect on the direction of HE Equipment i.e., HE Equipment and 629377CE0 go up and down completely randomly.

Pair Corralation between HE Equipment and 629377CE0

Given the investment horizon of 90 days HE Equipment Services is expected to generate 7.83 times more return on investment than 629377CE0. However, HE Equipment is 7.83 times more volatile than NRG Energy 575. It trades about 0.01 of its potential returns per unit of risk. NRG Energy 575 is currently generating about 0.01 per unit of risk. If you would invest  4,696  in HE Equipment Services on October 9, 2024 and sell it today you would earn a total of  34.00  from holding HE Equipment Services or generate 0.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.19%
Values	Daily Returns

HE Equipment Services  vs.  NRG Energy 575

HE Equipment Services

Risk-Adjusted Performance

0 of 100

Very Weak

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

NRG Energy 575

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NRG Energy 575 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 629377CE0 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with HE Equipment and 629377CE0

The main advantage of trading using opposite HE Equipment and 629377CE0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HE Equipment position performs unexpectedly, 629377CE0 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 629377CE0 will offset losses from the drop in 629377CE0's long position.

The idea behind HE Equipment Services and NRG Energy 575 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.