Correlation Between Talen Energy and Eastern
Can any of the company-specific risk be diversified away by investing in both Talen Energy and Eastern 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 Talen Energy and Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Talen Energy and Eastern Co, you can compare the effects of market volatilities on Talen Energy and Eastern 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 Talen Energy with a short position of Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talen Energy and Eastern.
Diversification Opportunities for Talen Energy and Eastern
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Talen and Eastern is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Talen Energy and Eastern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern and Talen Energy 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 Talen Energy are associated (or correlated) with Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern has no effect on the direction of Talen Energy i.e., Talen Energy and Eastern go up and down completely randomly.
Pair Corralation between Talen Energy and Eastern
Considering the 90-day investment horizon Talen Energy is expected to generate 1.52 times more return on investment than Eastern. However, Talen Energy is 1.52 times more volatile than Eastern Co. It trades about 0.22 of its potential returns per unit of risk. Eastern Co is currently generating about -0.01 per unit of risk. If you would invest 13,828 in Talen Energy on September 2, 2024 and sell it today you would earn a total of 7,613 from holding Talen Energy or generate 55.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Talen Energy vs. Eastern Co
Performance |
| Timeline |
| Talen Energy |
| Eastern |
Talen Energy and Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Talen Energy and Eastern
The main advantage of trading using opposite Talen Energy and Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Talen Energy position performs unexpectedly, Eastern 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 Eastern will offset losses from the drop in Eastern's long position.| Talen Energy vs. National Vision Holdings | Talen Energy vs. Avient Corp | Talen Energy vs. Pool Corporation | Talen Energy vs. Jeld Wen Holding |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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