Correlation Between PNM Resources and FirstEnergy
Can any of the company-specific risk be diversified away by investing in both PNM Resources and FirstEnergy 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 Resources and FirstEnergy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PNM Resources and FirstEnergy, you can compare the effects of market volatilities on PNM Resources and FirstEnergy 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 Resources with a short position of FirstEnergy. Check out your portfolio center. Please also check ongoing floating volatility patterns of PNM Resources and FirstEnergy.
Diversification Opportunities for PNM Resources and FirstEnergy
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PNM and FirstEnergy is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding PNM Resources and FirstEnergy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstEnergy and PNM Resources 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 Resources are associated (or correlated) with FirstEnergy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FirstEnergy has no effect on the direction of PNM Resources i.e., PNM Resources and FirstEnergy go up and down completely randomly.
Pair Corralation between PNM Resources and FirstEnergy
If you would invest 4,325 in PNM Resources on August 27, 2024 and sell it today you would earn a total of 0.00 from holding PNM Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
PNM Resources vs. FirstEnergy
Performance |
| Timeline |
| PNM Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| FirstEnergy |
PNM Resources and FirstEnergy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PNM Resources and FirstEnergy
The main advantage of trading using opposite PNM Resources and FirstEnergy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PNM Resources position performs unexpectedly, FirstEnergy 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 FirstEnergy will offset losses from the drop in FirstEnergy's long position.| PNM Resources vs. Portland General Electric | PNM Resources vs. MGE Energy | PNM Resources vs. CMS Energy | PNM Resources vs. OGE Energy |
| FirstEnergy vs. CenterPoint Energy | FirstEnergy vs. Pinnacle West Capital | FirstEnergy vs. Edison International | FirstEnergy vs. Public Service Enterprise |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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