Correlation Between REINET INVESTMENTS and Consolidated Edison
Can any of the company-specific risk be diversified away by investing in both REINET INVESTMENTS and Consolidated Edison 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 REINET INVESTMENTS and Consolidated Edison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REINET INVESTMENTS SCA and Consolidated Edison, you can compare the effects of market volatilities on REINET INVESTMENTS and Consolidated Edison 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 REINET INVESTMENTS with a short position of Consolidated Edison. Check out your portfolio center. Please also check ongoing floating volatility patterns of REINET INVESTMENTS and Consolidated Edison.
Diversification Opportunities for REINET INVESTMENTS and Consolidated Edison
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between REINET and Consolidated is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding REINET INVESTMENTS SCA and Consolidated Edison in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Edison and REINET INVESTMENTS 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 REINET INVESTMENTS SCA are associated (or correlated) with Consolidated Edison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Edison has no effect on the direction of REINET INVESTMENTS i.e., REINET INVESTMENTS and Consolidated Edison go up and down completely randomly.
Pair Corralation between REINET INVESTMENTS and Consolidated Edison
Assuming the 90 days horizon REINET INVESTMENTS SCA is expected to generate 2.19 times more return on investment than Consolidated Edison. However, REINET INVESTMENTS is 2.19 times more volatile than Consolidated Edison. It trades about 0.07 of its potential returns per unit of risk. Consolidated Edison is currently generating about -0.06 per unit of risk. If you would invest 2,360 in REINET INVESTMENTS SCA on September 15, 2024 and sell it today you would earn a total of 260.00 from holding REINET INVESTMENTS SCA or generate 11.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
REINET INVESTMENTS SCA vs. Consolidated Edison
Performance |
Timeline |
REINET INVESTMENTS SCA |
Consolidated Edison |
REINET INVESTMENTS and Consolidated Edison Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with REINET INVESTMENTS and Consolidated Edison
The main advantage of trading using opposite REINET INVESTMENTS and Consolidated Edison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REINET INVESTMENTS position performs unexpectedly, Consolidated Edison 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 Consolidated Edison will offset losses from the drop in Consolidated Edison's long position.REINET INVESTMENTS vs. ETFS Coffee ETC | REINET INVESTMENTS vs. Chuangs China Investments | REINET INVESTMENTS vs. Clean Energy Fuels | REINET INVESTMENTS vs. PennyMac Mortgage Investment |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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