Correlation Between Eversource Energy and One Gas

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

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

Diversification Opportunities for Eversource Energy and One Gas

-0.63

Correlation Coefficient

Eversource Energy  One Gas

Excellent diversification

The 3 months correlation between Eversource and One is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Eversource Energy and One Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Gas 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 One Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Gas has no effect on the direction of Eversource Energy i.e., Eversource Energy and One Gas go up and down completely randomly.

Pair Corralation between Eversource Energy and One Gas

Allowing for the 90-day total investment horizon Eversource Energy is expected to generate 0.94 times more return on investment than One Gas. However, Eversource Energy is 1.06 times less risky than One Gas. It trades about 0.16 of its potential returns per unit of risk. One Gas is currently generating about -0.07 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 Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Eversource Energy  vs.  One Gas

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.

One Gas

Risk-Adjusted Performance

Very Weak

Over the last 90 days One Gas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, One Gas is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Eversource Energy and One Gas

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

The idea behind Eversource Energy and One Gas 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.