Correlation Between CGE Energy and Constellation Energy
Can any of the company-specific risk be diversified away by investing in both CGE Energy and Constellation Energy 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 CGE Energy and Constellation Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CGE Energy and Constellation Energy Corp, you can compare the effects of market volatilities on CGE Energy and Constellation Energy 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 CGE Energy with a short position of Constellation Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of CGE Energy and Constellation Energy.
Diversification Opportunities for CGE Energy and Constellation Energy
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CGE and Constellation is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CGE Energy and Constellation Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellation Energy Corp and CGE 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 CGE Energy are associated (or correlated) with Constellation Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellation Energy Corp has no effect on the direction of CGE Energy i.e., CGE Energy and Constellation Energy go up and down completely randomly.
Pair Corralation between CGE Energy and Constellation Energy
Given the investment horizon of 90 days CGE Energy is expected to generate 9.46 times more return on investment than Constellation Energy. However, CGE Energy is 9.46 times more volatile than Constellation Energy Corp. It trades about 0.04 of its potential returns per unit of risk. Constellation Energy Corp is currently generating about 0.09 per unit of risk. If you would invest 40.00 in CGE Energy on September 2, 2024 and sell it today you would lose (39.99) from holding CGE Energy or give up 99.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CGE Energy vs. Constellation Energy Corp
Performance |
| Timeline |
| CGE Energy |
| Constellation Energy Corp |
CGE Energy and Constellation Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CGE Energy and Constellation Energy
The main advantage of trading using opposite CGE Energy and Constellation Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CGE Energy position performs unexpectedly, Constellation Energy 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 Constellation Energy will offset losses from the drop in Constellation Energy's long position.| CGE Energy vs. Green Stream Holdings | CGE Energy vs. Mass Megawat Wind | CGE Energy vs. Clean Vision Corp |
| Constellation Energy vs. Atlantica Sustainable Infrastructure | Constellation Energy vs. Clearway Energy | Constellation Energy vs. Brookfield Renewable Corp | Constellation Energy vs. Nextera Energy Partners |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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