Correlation Between Avista and Edison International

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

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

Diversification Opportunities for Avista and Edison International

-0.44

Correlation Coefficient

Avista  Edison International

Very good diversification

The 3 months correlation between Avista and Edison is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Avista and Edison International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edison International and Avista 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 Avista are associated (or correlated) with Edison International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edison International has no effect on the direction of Avista i.e., Avista and Edison International go up and down completely randomly.

Pair Corralation between Avista and Edison International

Considering the 90-day investment horizon Avista is expected to generate 30.08 times less return on investment than Edison International. But when comparing it to its historical volatility, Avista is 1.45 times less risky than Edison International. It trades about 0.0 of its potential returns per unit of risk. Edison International is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  5,173  in Edison International on July 2, 2025 and sell it today you would earn a total of  350.00  from holding Edison International or generate 6.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Avista  vs.  Edison International

Avista

Risk-Adjusted Performance

Weakest

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

Edison International

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Edison International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady forward indicators, Edison International may actually be approaching a critical reversion point that can send shares even higher in October 2025.

Pair Trading with Avista and Edison International

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

The idea behind Avista and Edison International 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.