Correlation Between NORTHEAST UTILITIES and AGREE RLTY

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

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

Diversification Opportunities for NORTHEAST UTILITIES and AGREE RLTY

0.4

Correlation Coefficient

NORTHEAST UTILITIES  AGREE RLTY

Very weak diversification

The 3 months correlation between NORTHEAST and AGREE is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding NORTHEAST UTILITIES and AGREE RLTY P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGREE RLTY P and NORTHEAST UTILITIES 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 NORTHEAST UTILITIES are associated (or correlated) with AGREE RLTY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGREE RLTY P has no effect on the direction of NORTHEAST UTILITIES i.e., NORTHEAST UTILITIES and AGREE RLTY go up and down completely randomly.

Pair Corralation between NORTHEAST UTILITIES and AGREE RLTY

Assuming the 90 days trading horizon NORTHEAST UTILITIES is expected to generate 1.11 times less return on investment than AGREE RLTY. In addition to that, NORTHEAST UTILITIES is 1.64 times more volatile than AGREE RLTY P. It trades about 0.04 of its total potential returns per unit of risk. AGREE RLTY P is currently generating about 0.07 per unit of volatility. If you would invest  6,668  in AGREE RLTY P on December 22, 2024 and sell it today you would earn a total of  272.00  from holding AGREE RLTY P or generate 4.08% return on investment over 90 days.

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

NORTHEAST UTILITIES  vs.  AGREE RLTY P

NORTHEAST UTILITIES

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NORTHEAST UTILITIES are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward-looking indicators, NORTHEAST UTILITIES is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

AGREE RLTY P

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AGREE RLTY P are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, AGREE RLTY is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with NORTHEAST UTILITIES and AGREE RLTY

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

The idea behind NORTHEAST UTILITIES and AGREE RLTY P 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.