Correlation Between Exelon and Consolidated Edison
Can any of the company-specific risk be diversified away by investing in both Exelon and Consolidated Edison 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 Exelon and Consolidated Edison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exelon and Consolidated Edison, you can compare the effects of market volatilities on Exelon and Consolidated Edison 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 Exelon with a short position of Consolidated Edison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exelon and Consolidated Edison.
Diversification Opportunities for Exelon and Consolidated Edison
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Exelon and Consolidated is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Exelon and Consolidated Edison in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Edison and Exelon 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 Exelon are associated (or correlated) with Consolidated Edison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Edison has no effect on the direction of Exelon i.e., Exelon and Consolidated Edison go up and down completely randomly.
Pair Corralation between Exelon and Consolidated Edison
Considering the 90-day investment horizon Exelon is expected to generate 1.05 times more return on investment than Consolidated Edison. However, Exelon is 1.05 times more volatile than Consolidated Edison. It trades about 0.08 of its potential returns per unit of risk. Consolidated Edison is currently generating about -0.07 per unit of risk. If you would invest 3,777 in Exelon on November 1, 2024 and sell it today you would earn a total of 225.00 from holding Exelon or generate 5.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exelon vs. Consolidated Edison
Performance |
| Timeline |
| Exelon |
| Consolidated Edison |
Exelon and Consolidated Edison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exelon and Consolidated Edison
The main advantage of trading using opposite Exelon and Consolidated Edison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exelon position performs unexpectedly, Consolidated Edison 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 Consolidated Edison will offset losses from the drop in Consolidated Edison's long position.| Exelon vs. Duke Energy | Exelon vs. Dominion Energy | Exelon vs. Southern Company | Exelon vs. Consolidated Edison |
| Consolidated Edison vs. Duke Energy | Consolidated Edison vs. Dominion Energy | Consolidated Edison vs. American Electric Power | Consolidated Edison vs. Nextera Energy |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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