Correlation Between Talen Energy and Georgia Power
Can any of the company-specific risk be diversified away by investing in both Talen Energy and Georgia Power 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 Georgia Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Talen Energy and Georgia Power Co, you can compare the effects of market volatilities on Talen Energy and Georgia Power 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 Georgia Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talen Energy and Georgia Power.
Diversification Opportunities for Talen Energy and Georgia Power
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Talen and Georgia is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Talen Energy and Georgia Power Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Georgia Power 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 Georgia Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Georgia Power has no effect on the direction of Talen Energy i.e., Talen Energy and Georgia Power go up and down completely randomly.
Pair Corralation between Talen Energy and Georgia Power
Considering the 90-day investment horizon Talen Energy is expected to generate 3.85 times more return on investment than Georgia Power. However, Talen Energy is 3.85 times more volatile than Georgia Power Co. It trades about 0.11 of its potential returns per unit of risk. Georgia Power Co is currently generating about -0.04 per unit of risk. If you would invest 20,442 in Talen Energy on November 29, 2024 and sell it today you would earn a total of 1,329 from holding Talen Energy or generate 6.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Talen Energy vs. Georgia Power Co
Performance |
| Timeline |
| Talen Energy |
| Georgia Power |
Talen Energy and Georgia Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Talen Energy and Georgia Power
The main advantage of trading using opposite Talen Energy and Georgia Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Talen Energy position performs unexpectedly, Georgia Power 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 Georgia Power will offset losses from the drop in Georgia Power's long position.| Talen Energy vs. Diageo PLC ADR | Talen Energy vs. NETGEAR | Talen Energy vs. National CineMedia | Talen Energy vs. KVH Industries |
| Georgia Power vs. Southern Co | Georgia Power vs. Entergy Arkansas LLC | Georgia Power vs. DTE Energy Co | Georgia Power vs. Entergy New Orleans |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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