Correlation Between NORTHEAST UTILITIES and Playtech Plc
Can any of the company-specific risk be diversified away by investing in both NORTHEAST UTILITIES and Playtech Plc 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 Playtech Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NORTHEAST UTILITIES and Playtech plc, you can compare the effects of market volatilities on NORTHEAST UTILITIES and Playtech Plc 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 Playtech Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORTHEAST UTILITIES and Playtech Plc.
Diversification Opportunities for NORTHEAST UTILITIES and Playtech Plc
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NORTHEAST and Playtech is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding NORTHEAST UTILITIES and Playtech plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtech plc 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 Playtech Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playtech plc has no effect on the direction of NORTHEAST UTILITIES i.e., NORTHEAST UTILITIES and Playtech Plc go up and down completely randomly.
Pair Corralation between NORTHEAST UTILITIES and Playtech Plc
Assuming the 90 days trading horizon NORTHEAST UTILITIES is expected to generate 2.27 times less return on investment than Playtech Plc. In addition to that, NORTHEAST UTILITIES is 1.4 times more volatile than Playtech plc. It trades about 0.01 of its total potential returns per unit of risk. Playtech plc is currently generating about 0.04 per unit of volatility. If you would invest 844.00 in Playtech plc on December 25, 2024 and sell it today you would earn a total of 20.00 from holding Playtech plc or generate 2.37% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.36% |
Values | Daily Returns |
NORTHEAST UTILITIES vs. Playtech plc
Performance |
Timeline |
NORTHEAST UTILITIES |
Playtech plc |
NORTHEAST UTILITIES and Playtech Plc Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NORTHEAST UTILITIES and Playtech Plc
The main advantage of trading using opposite NORTHEAST UTILITIES and Playtech Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORTHEAST UTILITIES position performs unexpectedly, Playtech Plc 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 Playtech Plc will offset losses from the drop in Playtech Plc's long position.NORTHEAST UTILITIES vs. FARM 51 GROUP | NORTHEAST UTILITIES vs. China Railway Construction | NORTHEAST UTILITIES vs. UNITED UTILITIES GR | NORTHEAST UTILITIES vs. TITAN MACHINERY |
Playtech Plc vs. Infrastrutture Wireless Italiane | Playtech Plc vs. KENEDIX OFFICE INV | Playtech Plc vs. CENTURIA OFFICE REIT | Playtech Plc vs. PLAYTECH |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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