Correlation Between Exelon and MGE Energy
Can any of the company-specific risk be diversified away by investing in both Exelon and MGE 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 Exelon and MGE Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exelon and MGE Energy, you can compare the effects of market volatilities on Exelon and MGE 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 Exelon with a short position of MGE Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exelon and MGE Energy.
Diversification Opportunities for Exelon and MGE Energy
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Exelon and MGE is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Exelon and MGE Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGE Energy 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 MGE Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGE Energy has no effect on the direction of Exelon i.e., Exelon and MGE Energy go up and down completely randomly.
Pair Corralation between Exelon and MGE Energy
Considering the 90-day investment horizon Exelon is expected to generate 0.8 times more return on investment than MGE Energy. However, Exelon is 1.24 times less risky than MGE Energy. It trades about 0.27 of its potential returns per unit of risk. MGE Energy is currently generating about 0.0 per unit of risk. If you would invest 3,719 in Exelon on October 20, 2024 and sell it today you would earn a total of 223.00 from holding Exelon or generate 6.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exelon vs. MGE Energy
Performance |
| Timeline |
| Exelon |
| MGE Energy |
Exelon and MGE Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exelon and MGE Energy
The main advantage of trading using opposite Exelon and MGE Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exelon position performs unexpectedly, MGE 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 MGE Energy will offset losses from the drop in MGE Energy's long position.| Exelon vs. Duke Energy | Exelon vs. Dominion Energy | Exelon vs. Southern Company | Exelon vs. Consolidated Edison |
| MGE Energy vs. CMS Energy | MGE Energy vs. Ameren Corp | MGE Energy vs. Pinnacle West Capital | MGE Energy vs. Evergy, |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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