Correlation Between NORTHEAST UTILITIES and Calibre Mining

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

By analyzing existing cross correlation between NORTHEAST UTILITIES and Calibre Mining Corp, you can compare the effects of market volatilities on NORTHEAST UTILITIES and Calibre Mining 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 Calibre Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORTHEAST UTILITIES and Calibre Mining.

Diversification Opportunities for NORTHEAST UTILITIES and Calibre Mining

0.65

Correlation Coefficient

NORTHEAST UTILITIES  Calibre Mining

Poor diversification

The 3 months correlation between NORTHEAST and Calibre is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding NORTHEAST UTILITIES and Calibre Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calibre Mining Corp 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 Calibre Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calibre Mining Corp has no effect on the direction of NORTHEAST UTILITIES i.e., NORTHEAST UTILITIES and Calibre Mining go up and down completely randomly.

Pair Corralation between NORTHEAST UTILITIES and Calibre Mining

Assuming the 90 days trading horizon NORTHEAST UTILITIES is expected to generate 7.84 times less return on investment than Calibre Mining. But when comparing it to its historical volatility, NORTHEAST UTILITIES is 2.13 times less risky than Calibre Mining. It trades about 0.05 of its potential returns per unit of risk. Calibre Mining Corp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  144.00  in Calibre Mining Corp on October 22, 2024 and sell it today you would earn a total of  12.00  from holding Calibre Mining Corp or generate 8.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.12%
Values	Daily Returns

NORTHEAST UTILITIES  vs.  Calibre Mining Corp

NORTHEAST UTILITIES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NORTHEAST UTILITIES has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Calibre Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calibre Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with NORTHEAST UTILITIES and Calibre Mining

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

The idea behind NORTHEAST UTILITIES and Calibre Mining Corp 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.