Correlation Between Exelon and Entergy
Can any of the company-specific risk be diversified away by investing in both Exelon and Entergy 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 Entergy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exelon and Entergy, you can compare the effects of market volatilities on Exelon and Entergy 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 Entergy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exelon and Entergy.
Diversification Opportunities for Exelon and Entergy
Good diversification
The 3 months correlation between Exelon and Entergy is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Exelon and Entergy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entergy 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 Entergy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entergy has no effect on the direction of Exelon i.e., Exelon and Entergy go up and down completely randomly.
Pair Corralation between Exelon and Entergy
Considering the 90-day investment horizon Exelon is expected to generate 25.68 times less return on investment than Entergy. But when comparing it to its historical volatility, Exelon is 3.14 times less risky than Entergy. It trades about 0.03 of its potential returns per unit of risk. Entergy is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 13,332 in Entergy on August 31, 2024 and sell it today you would earn a total of 2,308 from holding Entergy or generate 17.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exelon vs. Entergy
Performance |
| Timeline |
| Exelon |
| Entergy |
Exelon and Entergy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exelon and Entergy
The main advantage of trading using opposite Exelon and Entergy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exelon position performs unexpectedly, Entergy 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 Entergy will offset losses from the drop in Entergy's long position.| Exelon vs. Duke Energy | Exelon vs. Dominion Energy | Exelon vs. Southern Company | Exelon vs. Consolidated Edison |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |