Correlation Between PNM Old and American Electric
Can any of the company-specific risk be diversified away by investing in both PNM Old and American Electric 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 PNM Old and American Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PNM Old and American Electric Power, you can compare the effects of market volatilities on PNM Old and American Electric 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 PNM Old with a short position of American Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of PNM Old and American Electric.
Diversification Opportunities for PNM Old and American Electric
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between PNM and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PNM Old and American Electric Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Electric Power and PNM Old 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 PNM Old are associated (or correlated) with American Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Electric Power has no effect on the direction of PNM Old i.e., PNM Old and American Electric go up and down completely randomly.
Pair Corralation between PNM Old and American Electric
If you would invest 9,635 in American Electric Power on November 18, 2024 and sell it today you would earn a total of 548.00 from holding American Electric Power or generate 5.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
PNM Old vs. American Electric Power
Performance |
| Timeline |
| PNM Old |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| American Electric Power |
PNM Old and American Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PNM Old and American Electric
The main advantage of trading using opposite PNM Old and American Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PNM Old position performs unexpectedly, American Electric 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 American Electric will offset losses from the drop in American Electric's long position.| PNM Old vs. Portland General Electric | PNM Old vs. MGE Energy | PNM Old vs. CMS Energy | PNM Old vs. OGE Energy |
| American Electric vs. Southern Company | American Electric vs. Dominion Energy | American Electric vs. Nextera Energy | American Electric 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |