Correlation Between Xcel Energy and Alliant Energy
Can any of the company-specific risk be diversified away by investing in both Xcel Energy and Alliant 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 Xcel Energy and Alliant Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xcel Energy and Alliant Energy Corp, you can compare the effects of market volatilities on Xcel Energy and Alliant 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 Xcel Energy with a short position of Alliant Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xcel Energy and Alliant Energy.
Diversification Opportunities for Xcel Energy and Alliant Energy
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Xcel and Alliant is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Xcel Energy and Alliant Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliant Energy Corp and Xcel 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 Xcel Energy are associated (or correlated) with Alliant Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliant Energy Corp has no effect on the direction of Xcel Energy i.e., Xcel Energy and Alliant Energy go up and down completely randomly.
Pair Corralation between Xcel Energy and Alliant Energy
Considering the 90-day investment horizon Xcel Energy is expected to generate 0.87 times more return on investment than Alliant Energy. However, Xcel Energy is 1.14 times less risky than Alliant Energy. It trades about 0.32 of its potential returns per unit of risk. Alliant Energy Corp is currently generating about 0.12 per unit of risk. If you would invest 6,448 in Xcel Energy on August 27, 2024 and sell it today you would earn a total of 687.00 from holding Xcel Energy or generate 10.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xcel Energy vs. Alliant Energy Corp
Performance |
| Timeline |
| Xcel Energy |
| Alliant Energy Corp |
Xcel Energy and Alliant Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xcel Energy and Alliant Energy
The main advantage of trading using opposite Xcel Energy and Alliant Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xcel Energy position performs unexpectedly, Alliant 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 Alliant Energy will offset losses from the drop in Alliant Energy's long position.| Xcel Energy vs. Alliant Energy Corp | Xcel Energy vs. Entergy | Xcel Energy vs. Pinnacle West Capital | Xcel Energy vs. CMS Energy |
| Alliant Energy vs. DTE Energy | Alliant Energy vs. Ameren Corp | Alliant Energy vs. CenterPoint Energy | Alliant Energy vs. Pinnacle West Capital |
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.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |