Correlation Between 207597EJ0 and Waters

Can any of the company-specific risk be diversified away by investing in both 207597EJ0 and Waters 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 207597EJ0 and Waters into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CONNECTICUT LT PWR and Waters, you can compare the effects of market volatilities on 207597EJ0 and Waters 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 207597EJ0 with a short position of Waters. Check out your portfolio center. Please also check ongoing floating volatility patterns of 207597EJ0 and Waters.

Diversification Opportunities for 207597EJ0 and Waters

-0.34

Correlation Coefficient

207597EJ0  Waters

Very good diversification

The 3 months correlation between 207597EJ0 and Waters is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding CONNECTICUT LT PWR and Waters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waters and 207597EJ0 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 CONNECTICUT LT PWR are associated (or correlated) with Waters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waters has no effect on the direction of 207597EJ0 i.e., 207597EJ0 and Waters go up and down completely randomly.

Pair Corralation between 207597EJ0 and Waters

Assuming the 90 days trading horizon CONNECTICUT LT PWR is expected to under-perform the Waters. But the bond apears to be less risky and, when comparing its historical volatility, CONNECTICUT LT PWR is 3.74 times less risky than Waters. The bond trades about -0.21 of its potential returns per unit of risk. The Waters is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  38,734  in Waters on September 4, 2024 and sell it today you would lose (34.00) from holding Waters or give up 0.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.71%
Values	Daily Returns

CONNECTICUT LT PWR  vs.  Waters

CONNECTICUT LT PWR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CONNECTICUT LT PWR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 207597EJ0 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Waters

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Waters are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Waters unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 207597EJ0 and Waters

The main advantage of trading using opposite 207597EJ0 and Waters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 207597EJ0 position performs unexpectedly, Waters 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 Waters will offset losses from the drop in Waters' long position.

The idea behind CONNECTICUT LT PWR and Waters 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.