Correlation Between Fortum Oyj and Constellation Energy
Can any of the company-specific risk be diversified away by investing in both Fortum Oyj and Constellation 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 Fortum Oyj and Constellation Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortum Oyj and Constellation Energy Corp, you can compare the effects of market volatilities on Fortum Oyj and Constellation 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 Fortum Oyj with a short position of Constellation Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortum Oyj and Constellation Energy.
Diversification Opportunities for Fortum Oyj and Constellation Energy
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fortum and Constellation is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Fortum Oyj and Constellation Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellation Energy Corp and Fortum Oyj 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 Fortum Oyj are associated (or correlated) with Constellation Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellation Energy Corp has no effect on the direction of Fortum Oyj i.e., Fortum Oyj and Constellation Energy go up and down completely randomly.
Pair Corralation between Fortum Oyj and Constellation Energy
Assuming the 90 days horizon Fortum Oyj is expected to under-perform the Constellation Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Fortum Oyj is 14.64 times less risky than Constellation Energy. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Constellation Energy Corp is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 22,864 in Constellation Energy Corp on October 26, 2024 and sell it today you would earn a total of 10,383 from holding Constellation Energy Corp or generate 45.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortum Oyj vs. Constellation Energy Corp
Performance |
| Timeline |
| Fortum Oyj |
| Constellation Energy Corp |
Fortum Oyj and Constellation Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortum Oyj and Constellation Energy
The main advantage of trading using opposite Fortum Oyj and Constellation Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortum Oyj position performs unexpectedly, Constellation 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 Constellation Energy will offset losses from the drop in Constellation Energy's long position.| Fortum Oyj vs. Constellation Energy Corp | Fortum Oyj vs. Verbund AG ADR | Fortum Oyj vs. Orsted AS ADR | Fortum Oyj vs. Orsted AS |
| Constellation Energy vs. Clearway Energy | Constellation Energy vs. Brookfield Renewable Corp | Constellation Energy vs. Nextera Energy Partners | Constellation Energy vs. Brookfield Renewable Partners |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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