Correlation Between Eversource Energy and BioLight Life
Can any of the company-specific risk be diversified away by investing in both Eversource Energy and BioLight Life 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 Eversource Energy and BioLight Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eversource Energy and BioLight Life Sciences, you can compare the effects of market volatilities on Eversource Energy and BioLight Life 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 Eversource Energy with a short position of BioLight Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eversource Energy and BioLight Life.
Diversification Opportunities for Eversource Energy and BioLight Life
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Eversource and BioLight is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Eversource Energy and BioLight Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioLight Life Sciences and Eversource 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 Eversource Energy are associated (or correlated) with BioLight Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioLight Life Sciences has no effect on the direction of Eversource Energy i.e., Eversource Energy and BioLight Life go up and down completely randomly.
Pair Corralation between Eversource Energy and BioLight Life
Allowing for the 90-day total investment horizon Eversource Energy is expected to generate 0.62 times more return on investment than BioLight Life. However, Eversource Energy is 1.61 times less risky than BioLight Life. It trades about 0.25 of its potential returns per unit of risk. BioLight Life Sciences is currently generating about -0.71 per unit of risk. If you would invest 5,629 in Eversource Energy on January 26, 2024 and sell it today you would earn a total of 455.00 from holding Eversource Energy or generate 8.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 76.19% |
| Values | Daily Returns |
Eversource Energy vs. BioLight Life Sciences
Performance |
| Timeline |
| Eversource Energy |
| BioLight Life Sciences |
Eversource Energy and BioLight Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eversource Energy and BioLight Life
The main advantage of trading using opposite Eversource Energy and BioLight Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eversource Energy position performs unexpectedly, BioLight Life 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 BioLight Life will offset losses from the drop in BioLight Life's long position.| Eversource Energy vs. CenterPoint Energy | Eversource Energy vs. FirstEnergy | Eversource Energy vs. Pinnacle West Capital | Eversource Energy vs. Edison International |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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