Correlation Between Eversource Energy and Utilities Portfolio

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

By analyzing existing cross correlation between Eversource Energy and Utilities Portfolio Utilities, you can compare the effects of market volatilities on Eversource Energy and Utilities Portfolio 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 Utilities Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eversource Energy and Utilities Portfolio.

Diversification Opportunities for Eversource Energy and Utilities Portfolio

0.71

Correlation Coefficient

Eversource Energy  Utilities Portfolio

Poor diversification

The 3 months correlation between Eversource and Utilities is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Eversource Energy and Utilities Portfolio Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Utilities Portfolio 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 Utilities Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Utilities Portfolio has no effect on the direction of Eversource Energy i.e., Eversource Energy and Utilities Portfolio go up and down completely randomly.

Pair Corralation between Eversource Energy and Utilities Portfolio

Allowing for the 90-day total investment horizon Eversource Energy is expected to generate 1.62 times more return on investment than Utilities Portfolio. However, Eversource Energy is 1.62 times more volatile than Utilities Portfolio Utilities. It trades about 0.16 of its potential returns per unit of risk. Utilities Portfolio Utilities is currently generating about 0.14 per unit of risk. If you would invest  5,869  in Eversource Energy on April 29, 2025 and sell it today you would earn a total of  793.00  from holding Eversource Energy or generate 13.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Eversource Energy  vs.  Utilities Portfolio Utilities

Eversource Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eversource Energy are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Eversource Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Utilities Portfolio

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Utilities Portfolio Utilities are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Utilities Portfolio may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Eversource Energy and Utilities Portfolio

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

The idea behind Eversource Energy and Utilities Portfolio Utilities 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.