Correlation Between Consumers Energy and Heritage Distilling

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

By analyzing existing cross correlation between Consumers Energy and Heritage Distilling Holding, you can compare the effects of market volatilities on Consumers Energy and Heritage Distilling 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 Consumers Energy with a short position of Heritage Distilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consumers Energy and Heritage Distilling.

Diversification Opportunities for Consumers Energy and Heritage Distilling

-0.29

Correlation Coefficient

Consumers Energy  Heritage Distilling

Very good diversification

The 3 months correlation between Consumers and Heritage is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Consumers Energy and Heritage Distilling Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Distilling and Consumers Energy 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 Consumers Energy are associated (or correlated) with Heritage Distilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Distilling has no effect on the direction of Consumers Energy i.e., Consumers Energy and Heritage Distilling go up and down completely randomly.

Pair Corralation between Consumers Energy and Heritage Distilling

Assuming the 90 days trading horizon Consumers Energy is expected to generate 0.28 times more return on investment than Heritage Distilling. However, Consumers Energy is 3.58 times less risky than Heritage Distilling. It trades about 0.01 of its potential returns per unit of risk. Heritage Distilling Holding is currently generating about -0.33 per unit of risk. If you would invest  7,959  in Consumers Energy on September 15, 2024 and sell it today you would earn a total of  10.00  from holding Consumers Energy or generate 0.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	25.0%
Values	Daily Returns

Consumers Energy  vs.  Heritage Distilling Holding

Consumers Energy

Risk-Adjusted Performance

0 of 100

Very Weak

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

Heritage Distilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heritage Distilling Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Consumers Energy and Heritage Distilling

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

The idea behind Consumers Energy and Heritage Distilling Holding 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.