Correlation Between Astar and PNM Old
Can any of the company-specific risk be diversified away by investing in both Astar and PNM Old 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 Astar and PNM Old into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astar and PNM Old, you can compare the effects of market volatilities on Astar and PNM Old 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 Astar with a short position of PNM Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and PNM Old.
Diversification Opportunities for Astar and PNM Old
Average diversification
The 3 months correlation between Astar and PNM is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Astar and PNM Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PNM Old and Astar 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 Astar are associated (or correlated) with PNM Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PNM Old has no effect on the direction of Astar i.e., Astar and PNM Old go up and down completely randomly.
Pair Corralation between Astar and PNM Old
If you would invest 4,325 in PNM Old on October 12, 2024 and sell it today you would earn a total of 0.00 from holding PNM Old or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Astar vs. PNM Old
Performance |
| Timeline |
| Astar |
| PNM Old |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Astar and PNM Old Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astar and PNM Old
The main advantage of trading using opposite Astar and PNM Old positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar position performs unexpectedly, PNM Old 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 PNM Old will offset losses from the drop in PNM Old's long position.The idea behind Astar and PNM Old 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.| PNM Old vs. Portland General Electric | PNM Old vs. MGE Energy | PNM Old vs. CMS Energy | PNM Old vs. OGE Energy |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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