Correlation Between Eversource Energy and Prudential Utility

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

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

Diversification Opportunities for Eversource Energy and Prudential Utility

0.68

Correlation Coefficient

Eversource Energy  Prudential Utility

Poor diversification

The 3 months correlation between Eversource and Prudential is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Eversource Energy and Prudential Utility Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Utility 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 Prudential Utility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Utility has no effect on the direction of Eversource Energy i.e., Eversource Energy and Prudential Utility go up and down completely randomly.

Pair Corralation between Eversource Energy and Prudential Utility

Allowing for the 90-day total investment horizon Eversource Energy is expected to generate 1.48 times less return on investment than Prudential Utility. In addition to that, Eversource Energy is 1.32 times more volatile than Prudential Utility Fund. It trades about 0.05 of its total potential returns per unit of risk. Prudential Utility Fund is currently generating about 0.1 per unit of volatility. If you would invest  1,556  in Prudential Utility Fund on May 17, 2025 and sell it today you would earn a total of  79.00  from holding Prudential Utility Fund or generate 5.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Eversource Energy  vs.  Prudential Utility Fund

Eversource Energy

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Eversource Energy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Eversource Energy is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Prudential Utility

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Utility Fund are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Prudential Utility is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eversource Energy and Prudential Utility

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

The idea behind Eversource Energy and Prudential Utility Fund 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.