Correlation Between Exelon and NextEra Energy,
Can any of the company-specific risk be diversified away by investing in both Exelon and NextEra 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 NextEra Energy, into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exelon and NextEra Energy,, you can compare the effects of market volatilities on Exelon and NextEra 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 NextEra Energy,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exelon and NextEra Energy,.
Diversification Opportunities for Exelon and NextEra Energy,
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Exelon and NextEra is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Exelon and NextEra Energy, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextEra 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 NextEra Energy,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextEra Energy, has no effect on the direction of Exelon i.e., Exelon and NextEra Energy, go up and down completely randomly.
Pair Corralation between Exelon and NextEra Energy,
Considering the 90-day investment horizon Exelon is expected to generate 0.86 times more return on investment than NextEra Energy,. However, Exelon is 1.16 times less risky than NextEra Energy,. It trades about -0.06 of its potential returns per unit of risk. NextEra Energy, is currently generating about -0.2 per unit of risk. If you would invest 3,983 in Exelon on August 28, 2024 and sell it today you would lose (70.00) from holding Exelon or give up 1.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exelon vs. NextEra Energy,
Performance |
| Timeline |
| Exelon |
| NextEra Energy, |
Exelon and NextEra Energy, Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exelon and NextEra Energy,
The main advantage of trading using opposite Exelon and NextEra Energy, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exelon position performs unexpectedly, NextEra 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 NextEra Energy, will offset losses from the drop in NextEra Energy,'s long position.| Exelon vs. Duke Energy | Exelon vs. Dominion Energy | Exelon vs. Southern Company | Exelon vs. Consolidated Edison |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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