Correlation Between Constellation Energy and Fortum Oyj
Can any of the company-specific risk be diversified away by investing in both Constellation Energy and Fortum Oyj 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 Fortum Oyj 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 Fortum Oyj, you can compare the effects of market volatilities on Constellation Energy and Fortum Oyj 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 Fortum Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Energy and Fortum Oyj.
Diversification Opportunities for Constellation Energy and Fortum Oyj
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Constellation and Fortum is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Energy Corp and Fortum Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortum Oyj 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 Fortum Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortum Oyj has no effect on the direction of Constellation Energy i.e., Constellation Energy and Fortum Oyj go up and down completely randomly.
Pair Corralation between Constellation Energy and Fortum Oyj
Considering the 90-day investment horizon Constellation Energy Corp is expected to generate 14.24 times more return on investment than Fortum Oyj. However, Constellation Energy is 14.24 times more volatile than Fortum Oyj. It trades about 0.35 of its potential returns per unit of risk. Fortum Oyj is currently generating about -0.04 per unit of risk. If you would invest 22,864 in Constellation Energy Corp on October 26, 2024 and sell it today you would earn a total of 11,609 from holding Constellation Energy Corp or generate 50.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Constellation Energy Corp vs. Fortum Oyj
Performance |
| Timeline |
| Constellation Energy Corp |
| Fortum Oyj |
Constellation Energy and Fortum Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellation Energy and Fortum Oyj
The main advantage of trading using opposite Constellation Energy and Fortum Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Energy position performs unexpectedly, Fortum Oyj 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 Fortum Oyj will offset losses from the drop in Fortum Oyj's long position.| Constellation Energy vs. Clearway Energy | Constellation Energy vs. Brookfield Renewable Corp | Constellation Energy vs. Nextera Energy Partners | Constellation Energy vs. Brookfield Renewable Partners |
| Fortum Oyj vs. Constellation Energy Corp | Fortum Oyj vs. Verbund AG ADR | Fortum Oyj vs. Orsted AS ADR | Fortum Oyj vs. Orsted AS |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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