Correlation Between CONSOLIDATED and Gap,

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

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

Diversification Opportunities for CONSOLIDATED and Gap,

0.08

Correlation Coefficient

CONSOLIDATED  Gap,

Significant diversification

The 3 months correlation between CONSOLIDATED and Gap, is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding CONSOLIDATED EDISON PANY and The Gap, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gap, 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 PANY are associated (or correlated) with Gap,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gap, has no effect on the direction of CONSOLIDATED i.e., CONSOLIDATED and Gap, go up and down completely randomly.

Pair Corralation between CONSOLIDATED and Gap,

Assuming the 90 days trading horizon CONSOLIDATED EDISON PANY is expected to generate 0.27 times more return on investment than Gap,. However, CONSOLIDATED EDISON PANY is 3.66 times less risky than Gap,. It trades about -0.11 of its potential returns per unit of risk. The Gap, is currently generating about -0.15 per unit of risk. If you would invest  8,615  in CONSOLIDATED EDISON PANY on December 5, 2024 and sell it today you would lose (135.00) from holding CONSOLIDATED EDISON PANY or give up 1.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

CONSOLIDATED EDISON PANY  vs.  The Gap,

CONSOLIDATED EDISON PANY

Risk-Adjusted Performance

Very Weak

Over the last 90 days CONSOLIDATED EDISON PANY 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 latest stock price disturbance, may contribute to short-term losses for the investors.

Gap,

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Gap, has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with CONSOLIDATED and Gap,

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

The idea behind CONSOLIDATED EDISON PANY and The Gap, 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.