Correlation Between Exelon and Southern
Can any of the company-specific risk be diversified away by investing in both Exelon and Southern 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 Southern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exelon and Southern Company, you can compare the effects of market volatilities on Exelon and Southern 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 Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exelon and Southern.
Diversification Opportunities for Exelon and Southern
Weak diversification
The 3 months correlation between Exelon and Southern is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Exelon and Southern Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern 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 Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern has no effect on the direction of Exelon i.e., Exelon and Southern go up and down completely randomly.
Pair Corralation between Exelon and Southern
Considering the 90-day investment horizon Exelon is expected to generate 0.88 times more return on investment than Southern. However, Exelon is 1.14 times less risky than Southern. It trades about 0.29 of its potential returns per unit of risk. Southern Company is currently generating about 0.07 per unit of risk. If you would invest 3,942 in Exelon on November 18, 2024 and sell it today you would earn a total of 343.00 from holding Exelon or generate 8.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exelon vs. Southern Company
Performance |
| Timeline |
| Exelon |
| Southern |
Exelon and Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exelon and Southern
The main advantage of trading using opposite Exelon and Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exelon position performs unexpectedly, Southern 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 Southern will offset losses from the drop in Southern's long position.| Exelon vs. Duke Energy | Exelon vs. Dominion Energy | Exelon vs. Southern Company | Exelon vs. Consolidated Edison |
| Southern vs. Dominion Energy | Southern vs. American Electric Power | Southern vs. Nextera Energy | Southern 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Transaction History View history of all your transactions and understand their impact on performance |