Correlation Between Consolidated Edison and Alliant Energy
Can any of the company-specific risk be diversified away by investing in both Consolidated Edison and Alliant 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 Consolidated Edison and Alliant Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consolidated Edison and Alliant Energy Corp, you can compare the effects of market volatilities on Consolidated Edison and Alliant 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 Consolidated Edison with a short position of Alliant Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consolidated Edison and Alliant Energy.
Diversification Opportunities for Consolidated Edison and Alliant Energy
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Consolidated and Alliant is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Edison and Alliant Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliant Energy Corp and Consolidated Edison 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 Consolidated Edison are associated (or correlated) with Alliant Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliant Energy Corp has no effect on the direction of Consolidated Edison i.e., Consolidated Edison and Alliant Energy go up and down completely randomly.
Pair Corralation between Consolidated Edison and Alliant Energy
Allowing for the 90-day total investment horizon Consolidated Edison is expected to under-perform the Alliant Energy. But the stock apears to be less risky and, when comparing its historical volatility, Consolidated Edison is 1.71 times less risky than Alliant Energy. The stock trades about -0.24 of its potential returns per unit of risk. The Alliant Energy Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 6,055 in Alliant Energy Corp on August 23, 2024 and sell it today you would earn a total of 265.00 from holding Alliant Energy Corp or generate 4.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consolidated Edison vs. Alliant Energy Corp
Performance |
| Timeline |
| Consolidated Edison |
| Alliant Energy Corp |
Consolidated Edison and Alliant Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consolidated Edison and Alliant Energy
The main advantage of trading using opposite Consolidated Edison and Alliant Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Edison position performs unexpectedly, Alliant 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 Alliant Energy will offset losses from the drop in Alliant Energy's long position.| Consolidated Edison vs. Duke Energy | Consolidated Edison vs. Dominion Energy | Consolidated Edison vs. American Electric Power | Consolidated Edison vs. Nextera Energy |
| Alliant Energy vs. DTE Energy | Alliant Energy vs. Ameren Corp | Alliant Energy vs. CenterPoint Energy | Alliant Energy vs. Pinnacle West Capital |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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