Correlation Between Communication Services and National Grid
Can any of the company-specific risk be diversified away by investing in both Communication Services and National Grid 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 Communication Services and National Grid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Communication Services Select and National Grid PLC, you can compare the effects of market volatilities on Communication Services and National Grid 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 Communication Services with a short position of National Grid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Communication Services and National Grid.
Diversification Opportunities for Communication Services and National Grid
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Communication and National is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Communication Services Select and National Grid PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Grid PLC and Communication Services 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 Communication Services Select are associated (or correlated) with National Grid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Grid PLC has no effect on the direction of Communication Services i.e., Communication Services and National Grid go up and down completely randomly.
Pair Corralation between Communication Services and National Grid
Considering the 90-day investment horizon Communication Services Select is expected to generate 0.74 times more return on investment than National Grid. However, Communication Services Select is 1.36 times less risky than National Grid. It trades about 0.09 of its potential returns per unit of risk. National Grid PLC is currently generating about 0.05 per unit of risk. If you would invest 6,897 in Communication Services Select on August 17, 2025 and sell it today you would earn a total of 4,236 from holding Communication Services Select or generate 61.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Communication Services Select vs. National Grid PLC
Performance |
| Timeline |
| Communication Services |
| National Grid PLC |
Communication Services and National Grid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Communication Services and National Grid
The main advantage of trading using opposite Communication Services and National Grid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Communication Services position performs unexpectedly, National Grid 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 National Grid will offset losses from the drop in National Grid's long position.| Communication Services vs. Energy Select Sector | Communication Services vs. iShares MSCI EAFE | Communication Services vs. Vanguard Tax Managed Capital | Communication Services vs. Industrial Select Sector |
| National Grid vs. American Electric Power | National Grid vs. Duke Energy | National Grid vs. Dominion Energy | National Grid vs. Exelon |
Check out your portfolio center.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 Transaction History module to view history of all your transactions and understand their impact on performance.
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