Correlation Between Constellation Energy and United States
Can any of the company-specific risk be diversified away by investing in both Constellation Energy and United States 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 United States 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 United States Cellular, you can compare the effects of market volatilities on Constellation Energy and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Energy and United States.
Diversification Opportunities for Constellation Energy and United States
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Constellation and United is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Energy Corp and United States Cellular in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Cellular 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Cellular has no effect on the direction of Constellation Energy i.e., Constellation Energy and United States go up and down completely randomly.
Pair Corralation between Constellation Energy and United States
Considering the 90-day investment horizon Constellation Energy Corp is expected to generate 2.62 times more return on investment than United States. However, Constellation Energy is 2.62 times more volatile than United States Cellular. It trades about 0.1 of its potential returns per unit of risk. United States Cellular is currently generating about 0.08 per unit of risk. If you would invest 13,159 in Constellation Energy Corp on November 3, 2024 and sell it today you would earn a total of 16,839 from holding Constellation Energy Corp or generate 127.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Constellation Energy Corp vs. United States Cellular
Performance |
| Timeline |
| Constellation Energy Corp |
| United States Cellular |
Constellation Energy and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellation Energy and United States
The main advantage of trading using opposite Constellation Energy and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Energy position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' 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 |
| United States vs. United States Cellular | United States vs. United States Cellular | United States vs. Office Properties Income | United States vs. Southern Company Series |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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