Correlation Between Southern and PNM Old
Can any of the company-specific risk be diversified away by investing in both Southern and PNM Old 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 Southern and PNM Old into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Company and PNM Old, you can compare the effects of market volatilities on Southern and PNM Old 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 Southern with a short position of PNM Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern and PNM Old.
Diversification Opportunities for Southern and PNM Old
Pay attention - limited upside
The 3 months correlation between Southern and PNM is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Southern Company and PNM Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PNM Old and Southern 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 Southern Company are associated (or correlated) with PNM Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PNM Old has no effect on the direction of Southern i.e., Southern and PNM Old go up and down completely randomly.
Pair Corralation between Southern and PNM Old
If you would invest 4,325 in PNM Old on October 26, 2024 and sell it today you would earn a total of 0.00 from holding PNM Old or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 5.56% |
| Values | Daily Returns |
Southern Company vs. PNM Old
Performance |
| Timeline |
| Southern |
| PNM Old |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Southern and PNM Old Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern and PNM Old
The main advantage of trading using opposite Southern and PNM Old positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern position performs unexpectedly, PNM Old 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 PNM Old will offset losses from the drop in PNM Old's long position.| Southern vs. Dominion Energy | Southern vs. American Electric Power | Southern vs. Nextera Energy | Southern vs. Consolidated Edison |
| PNM Old vs. Portland General Electric | PNM Old vs. MGE Energy | PNM Old vs. CMS Energy | PNM Old vs. OGE Energy |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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