Correlation Between Exelon and Allete
Can any of the company-specific risk be diversified away by investing in both Exelon and Allete 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 Exelon and Allete into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exelon and Allete Inc, you can compare the effects of market volatilities on Exelon and Allete 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 Exelon with a short position of Allete. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exelon and Allete.
Diversification Opportunities for Exelon and Allete
Very weak diversification
The 3 months correlation between Exelon and Allete is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Exelon and Allete Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allete Inc and Exelon 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 Exelon are associated (or correlated) with Allete. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allete Inc has no effect on the direction of Exelon i.e., Exelon and Allete go up and down completely randomly.
Pair Corralation between Exelon and Allete
Considering the 90-day investment horizon Exelon is expected to generate 1.13 times less return on investment than Allete. But when comparing it to its historical volatility, Exelon is 1.06 times less risky than Allete. It trades about 0.08 of its potential returns per unit of risk. Allete Inc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5,852 in Allete Inc on January 24, 2024 and sell it today you would earn a total of 128.00 from holding Allete Inc or generate 2.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exelon vs. Allete Inc
Performance |
| Timeline |
| Exelon |
| Allete Inc |
Exelon and Allete Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exelon and Allete
The main advantage of trading using opposite Exelon and Allete positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exelon position performs unexpectedly, Allete 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 Allete will offset losses from the drop in Allete's long position.| Exelon vs. Centrais Eltricas Brasileiras | Exelon vs. Central Puerto SA | Exelon vs. CMS Energy | Exelon vs. Centrais Electricas Brasileiras |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Commodity Directory Find actively traded commodities issued by global exchanges |