Correlation Between PNM Resources and Alliant Energy
Can any of the company-specific risk be diversified away by investing in both PNM Resources and Alliant 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 PNM Resources and Alliant Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PNM Resources and Alliant Energy Corp, you can compare the effects of market volatilities on PNM Resources and Alliant 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 PNM Resources with a short position of Alliant Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of PNM Resources and Alliant Energy.
Diversification Opportunities for PNM Resources and Alliant Energy
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PNM and Alliant is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding PNM Resources and Alliant Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliant Energy Corp 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 Alliant Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliant Energy Corp has no effect on the direction of PNM Resources i.e., PNM Resources and Alliant Energy go up and down completely randomly.
Pair Corralation between PNM Resources and Alliant Energy
If you would invest 6,055 in Alliant Energy Corp on August 23, 2024 and sell it today you would earn a total of 265.00 from holding Alliant Energy Corp or generate 4.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.35% |
| Values | Daily Returns |
PNM Resources vs. Alliant Energy Corp
Performance |
| Timeline |
| PNM Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Alliant Energy Corp |
PNM Resources and Alliant Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PNM Resources and Alliant Energy
The main advantage of trading using opposite PNM Resources and Alliant Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PNM Resources position performs unexpectedly, Alliant 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 Alliant Energy will offset losses from the drop in Alliant Energy's long position.| PNM Resources vs. Portland General Electric | PNM Resources vs. MGE Energy | PNM Resources vs. CMS Energy | PNM Resources vs. OGE Energy |
| Alliant Energy vs. DTE Energy | Alliant Energy vs. Ameren Corp | Alliant Energy vs. CenterPoint Energy | Alliant Energy vs. Pinnacle West Capital |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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