Correlation Between PPL and TXNM Energy,
Can any of the company-specific risk be diversified away by investing in both PPL and TXNM 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 PPL and TXNM Energy, into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPL Corporation and TXNM Energy,, you can compare the effects of market volatilities on PPL and TXNM 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 PPL with a short position of TXNM Energy,. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPL and TXNM Energy,.
Diversification Opportunities for PPL and TXNM Energy,
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between PPL and TXNM is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding PPL Corp. and TXNM Energy, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TXNM Energy, and PPL 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 PPL Corporation are associated (or correlated) with TXNM Energy,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TXNM Energy, has no effect on the direction of PPL i.e., PPL and TXNM Energy, go up and down completely randomly.
Pair Corralation between PPL and TXNM Energy,
Considering the 90-day investment horizon PPL is expected to generate 1.17 times less return on investment than TXNM Energy,. But when comparing it to its historical volatility, PPL Corporation is 1.2 times less risky than TXNM Energy,. It trades about 0.15 of its potential returns per unit of risk. TXNM Energy, is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3,482 in TXNM Energy, on August 28, 2024 and sell it today you would earn a total of 1,439 from holding TXNM Energy, or generate 41.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PPL Corp. vs. TXNM Energy,
Performance |
| Timeline |
| PPL Corporation |
| TXNM Energy, |
PPL and TXNM Energy, Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPL and TXNM Energy,
The main advantage of trading using opposite PPL and TXNM Energy, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPL position performs unexpectedly, TXNM 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 TXNM Energy, will offset losses from the drop in TXNM Energy,'s long position.The idea behind PPL Corporation and TXNM Energy, pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| TXNM Energy, vs. Ecoloclean Industrs | TXNM Energy, vs. Apogee Enterprises | TXNM Energy, vs. Cementos Pacasmayo SAA | TXNM Energy, vs. Barrick Gold Corp |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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