Correlation Between AutoNation and Exelon
Can any of the company-specific risk be diversified away by investing in both AutoNation and Exelon 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 AutoNation and Exelon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AutoNation and Exelon, you can compare the effects of market volatilities on AutoNation and Exelon 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 AutoNation with a short position of Exelon. Check out your portfolio center. Please also check ongoing floating volatility patterns of AutoNation and Exelon.
Diversification Opportunities for AutoNation and Exelon
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AutoNation and Exelon is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding AutoNation and Exelon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exelon and AutoNation 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 AutoNation are associated (or correlated) with Exelon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exelon has no effect on the direction of AutoNation i.e., AutoNation and Exelon go up and down completely randomly.
Pair Corralation between AutoNation and Exelon
Allowing for the 90-day total investment horizon AutoNation is expected to under-perform the Exelon. In addition to that, AutoNation is 1.37 times more volatile than Exelon. It trades about -0.03 of its total potential returns per unit of risk. Exelon is currently generating about 0.14 per unit of volatility. If you would invest 3,656 in Exelon on January 26, 2024 and sell it today you would earn a total of 121.00 from holding Exelon or generate 3.31% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 95.45% |
Values | Daily Returns |
AutoNation vs. Exelon
Performance |
Timeline |
AutoNation |
Exelon |
AutoNation and Exelon Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AutoNation and Exelon
The main advantage of trading using opposite AutoNation and Exelon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AutoNation position performs unexpectedly, Exelon 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 Exelon will offset losses from the drop in Exelon's long position.AutoNation vs. Sonic Automotive | AutoNation vs. Lithia Motors | AutoNation vs. Asbury Automotive Group | AutoNation vs. Penske Automotive Group |
Exelon vs. Duke Energy | Exelon vs. Dominion Energy | Exelon vs. Southern Company | Exelon vs. Consolidated Edison |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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