Correlation Between Eversource Energy and VERBUND AG

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

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

Diversification Opportunities for Eversource Energy and VERBUND AG

0.38

Correlation Coefficient

Eversource Energy  VERBUND AG

Weak diversification

The 3 months correlation between Eversource and VERBUND is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Eversource Energy and VERBUND AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VERBUND AG 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 VERBUND AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VERBUND AG has no effect on the direction of Eversource Energy i.e., Eversource Energy and VERBUND AG go up and down completely randomly.

Pair Corralation between Eversource Energy and VERBUND AG

Assuming the 90 days horizon Eversource Energy is expected to generate 1.06 times more return on investment than VERBUND AG. However, Eversource Energy is 1.06 times more volatile than VERBUND AG. It trades about 0.08 of its potential returns per unit of risk. VERBUND AG is currently generating about -0.02 per unit of risk. If you would invest  5,137  in Eversource Energy on April 23, 2025 and sell it today you would earn a total of  413.00  from holding Eversource Energy or generate 8.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Eversource Energy  vs.  VERBUND AG

Eversource Energy

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eversource Energy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Eversource Energy may actually be approaching a critical reversion point that can send shares even higher in August 2025.

VERBUND AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days VERBUND AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, VERBUND AG is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Eversource Energy and VERBUND AG

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

The idea behind Eversource Energy and VERBUND AG 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.