Correlation Between Consolidated Edison and OGE Energy
Can any of the company-specific risk be diversified away by investing in both Consolidated Edison and OGE 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 OGE 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 OGE Energy, you can compare the effects of market volatilities on Consolidated Edison and OGE 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 OGE Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consolidated Edison and OGE Energy.
Diversification Opportunities for Consolidated Edison and OGE Energy
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Consolidated and OGE is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Edison and OGE Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OGE Energy 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 OGE Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OGE Energy has no effect on the direction of Consolidated Edison i.e., Consolidated Edison and OGE Energy go up and down completely randomly.
Pair Corralation between Consolidated Edison and OGE Energy
Allowing for the 90-day total investment horizon Consolidated Edison is expected to under-perform the OGE Energy. But the stock apears to be less risky and, when comparing its historical volatility, Consolidated Edison is 1.55 times less risky than OGE Energy. The stock trades about -0.21 of its potential returns per unit of risk. The OGE Energy is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 4,065 in OGE Energy on August 28, 2024 and sell it today you would earn a total of 320.00 from holding OGE Energy or generate 7.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consolidated Edison vs. OGE Energy
Performance |
| Timeline |
| Consolidated Edison |
| OGE Energy |
Consolidated Edison and OGE Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consolidated Edison and OGE Energy
The main advantage of trading using opposite Consolidated Edison and OGE Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Edison position performs unexpectedly, OGE 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 OGE Energy will offset losses from the drop in OGE 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 |
| OGE Energy vs. Alliant Energy Corp | OGE Energy vs. CMS Energy | OGE Energy vs. CenterPoint Energy | OGE 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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