Correlation Between CONSOLIDATED and Mosaic

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

By analyzing existing cross correlation between CONSOLIDATED EDISON N and The Mosaic, you can compare the effects of market volatilities on CONSOLIDATED and Mosaic 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 CONSOLIDATED with a short position of Mosaic. Check out your portfolio center. Please also check ongoing floating volatility patterns of CONSOLIDATED and Mosaic.

Diversification Opportunities for CONSOLIDATED and Mosaic

0.2

Correlation Coefficient

CONSOLIDATED  Mosaic

Modest diversification

The 3 months correlation between CONSOLIDATED and Mosaic is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding CONSOLIDATED EDISON N and The Mosaic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mosaic and CONSOLIDATED 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 CONSOLIDATED EDISON N are associated (or correlated) with Mosaic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mosaic has no effect on the direction of CONSOLIDATED i.e., CONSOLIDATED and Mosaic go up and down completely randomly.

Pair Corralation between CONSOLIDATED and Mosaic

Assuming the 90 days trading horizon CONSOLIDATED EDISON N is expected to generate 0.4 times more return on investment than Mosaic. However, CONSOLIDATED EDISON N is 2.48 times less risky than Mosaic. It trades about 0.38 of its potential returns per unit of risk. The Mosaic is currently generating about 0.07 per unit of risk. If you would invest  10,743  in CONSOLIDATED EDISON N on September 15, 2024 and sell it today you would earn a total of  499.00  from holding CONSOLIDATED EDISON N or generate 4.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	66.67%
Values	Daily Returns

CONSOLIDATED EDISON N  vs.  The Mosaic

CONSOLIDATED EDISON

Risk-Adjusted Performance

0 of 100

Very Weak

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

Mosaic

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Mosaic are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Mosaic may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CONSOLIDATED and Mosaic

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

The idea behind CONSOLIDATED EDISON N and The Mosaic 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.