Correlation Between Dominion Energy and Kenon Holdings
Can any of the company-specific risk be diversified away by investing in both Dominion Energy and Kenon Holdings 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 Dominion Energy and Kenon Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dominion Energy and Kenon Holdings, you can compare the effects of market volatilities on Dominion Energy and Kenon Holdings 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 Dominion Energy with a short position of Kenon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dominion Energy and Kenon Holdings.
Diversification Opportunities for Dominion Energy and Kenon Holdings
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dominion and Kenon is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Dominion Energy and Kenon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenon Holdings and Dominion 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 Dominion Energy are associated (or correlated) with Kenon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenon Holdings has no effect on the direction of Dominion Energy i.e., Dominion Energy and Kenon Holdings go up and down completely randomly.
Pair Corralation between Dominion Energy and Kenon Holdings
Taking into account the 90-day investment horizon Dominion Energy is expected to under-perform the Kenon Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Dominion Energy is 1.64 times less risky than Kenon Holdings. The stock trades about -0.09 of its potential returns per unit of risk. The Kenon Holdings is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2,754 in Kenon Holdings on October 22, 2024 and sell it today you would earn a total of 583.00 from holding Kenon Holdings or generate 21.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dominion Energy vs. Kenon Holdings
Performance |
| Timeline |
| Dominion Energy |
| Kenon Holdings |
Dominion Energy and Kenon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dominion Energy and Kenon Holdings
The main advantage of trading using opposite Dominion Energy and Kenon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dominion Energy position performs unexpectedly, Kenon Holdings 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 Kenon Holdings will offset losses from the drop in Kenon Holdings' long position.| Dominion Energy vs. Southern Company | Dominion Energy vs. American Electric Power | Dominion Energy vs. Nextera Energy | Dominion Energy vs. Consolidated Edison |
| Kenon Holdings vs. Vistra Energy Corp | Kenon Holdings vs. Pampa Energia SA | Kenon Holdings vs. NRG Energy | Kenon Holdings vs. TransAlta Corp |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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