Correlation Between PNM Old and Southern
Can any of the company-specific risk be diversified away by investing in both PNM Old and Southern 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 Southern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PNM Old and Southern Company, you can compare the effects of market volatilities on PNM Old and Southern 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 Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of PNM Old and Southern.
Diversification Opportunities for PNM Old and Southern
Excellent diversification
The 3 months correlation between PNM and Southern is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding PNM Old and Southern Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern 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 Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern has no effect on the direction of PNM Old i.e., PNM Old and Southern go up and down completely randomly.
Pair Corralation between PNM Old and Southern
If you would invest 8,096 in Southern Company on November 5, 2024 and sell it today you would earn a total of 299.00 from holding Southern Company or generate 3.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 5.0% |
| Values | Daily Returns |
PNM Old vs. Southern Company
Performance |
| Timeline |
| PNM Old |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Southern |
PNM Old and Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PNM Old and Southern
The main advantage of trading using opposite PNM Old and Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PNM Old position performs unexpectedly, Southern 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 Southern will offset losses from the drop in Southern's long position.| PNM Old vs. Portland General Electric | PNM Old vs. MGE Energy | PNM Old vs. CMS Energy | PNM Old vs. OGE Energy |
| Southern vs. Dominion Energy | Southern vs. American Electric Power | Southern vs. Nextera Energy | Southern 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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