Correlation Between Nextera Energy and Constellation Energy
Can any of the company-specific risk be diversified away by investing in both Nextera Energy 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 Nextera Energy and Constellation Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nextera Energy Partners and Constellation Energy Corp, you can compare the effects of market volatilities on Nextera Energy 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 Nextera Energy with a short position of Constellation Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextera Energy and Constellation Energy.
Diversification Opportunities for Nextera Energy and Constellation Energy
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nextera and Constellation is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Nextera Energy Partners 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 Nextera Energy 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 Nextera Energy Partners 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 Nextera Energy i.e., Nextera Energy and Constellation Energy go up and down completely randomly.
Pair Corralation between Nextera Energy and Constellation Energy
Considering the 90-day investment horizon Nextera Energy Partners is expected to under-perform the Constellation Energy. But the stock apears to be less risky and, when comparing its historical volatility, Nextera Energy Partners is 1.27 times less risky than Constellation Energy. The stock trades about -0.16 of its potential returns per unit of risk. The Constellation Energy Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 23,013 in Constellation Energy Corp on August 24, 2024 and sell it today you would earn a total of 2,171 from holding Constellation Energy Corp or generate 9.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nextera Energy Partners vs. Constellation Energy Corp
Performance |
| Timeline |
| Nextera Energy Partners |
| Constellation Energy Corp |
Nextera Energy and Constellation Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nextera Energy and Constellation Energy
The main advantage of trading using opposite Nextera Energy and Constellation Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextera Energy 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.| Nextera Energy vs. Brookfield Renewable Corp | Nextera Energy vs. Algonquin Power Utilities | Nextera Energy vs. Clearway Energy Class | Nextera Energy vs. Atlantica Sustainable Infrastructure |
| Constellation Energy vs. Atlantica Sustainable Infrastructure | Constellation Energy vs. Clearway Energy | Constellation Energy vs. Brookfield Renewable Corp | Constellation Energy vs. Nextera Energy 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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