Correlation Between Constellation Energy and High-yield Municipal
Can any of the company-specific risk be diversified away by investing in both Constellation Energy and High-yield Municipal 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 Constellation Energy and High-yield Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Constellation Energy Corp and High Yield Municipal Fund, you can compare the effects of market volatilities on Constellation Energy and High-yield Municipal 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 Constellation Energy with a short position of High-yield Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Energy and High-yield Municipal.
Diversification Opportunities for Constellation Energy and High-yield Municipal
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Constellation and High-yield is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Energy Corp and High Yield Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Municipal and Constellation 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 Constellation Energy Corp are associated (or correlated) with High-yield Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Municipal has no effect on the direction of Constellation Energy i.e., Constellation Energy and High-yield Municipal go up and down completely randomly.
Pair Corralation between Constellation Energy and High-yield Municipal
Considering the 90-day investment horizon Constellation Energy Corp is expected to under-perform the High-yield Municipal. In addition to that, Constellation Energy is 12.67 times more volatile than High Yield Municipal Fund. It trades about -0.06 of its total potential returns per unit of risk. High Yield Municipal Fund is currently generating about 0.23 per unit of volatility. If you would invest 883.00 in High Yield Municipal Fund on November 29, 2024 and sell it today you would earn a total of 11.00 from holding High Yield Municipal Fund or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Constellation Energy Corp vs. High Yield Municipal Fund
Performance |
| Timeline |
| Constellation Energy Corp |
| High Yield Municipal |
Constellation Energy and High-yield Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellation Energy and High-yield Municipal
The main advantage of trading using opposite Constellation Energy and High-yield Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Energy position performs unexpectedly, High-yield Municipal 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 High-yield Municipal will offset losses from the drop in High-yield Municipal's long position.| Constellation Energy vs. Clearway Energy | Constellation Energy vs. Brookfield Renewable Corp | Constellation Energy vs. Brookfield Renewable Partners | Constellation Energy vs. Clearway Energy Class |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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