Correlation Between Exelon and AutoNation
Can any of the company-specific risk be diversified away by investing in both Exelon and AutoNation 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 AutoNation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exelon and AutoNation, you can compare the effects of market volatilities on Exelon and AutoNation 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 AutoNation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exelon and AutoNation.
Diversification Opportunities for Exelon and AutoNation
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Exelon and AutoNation is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Exelon and AutoNation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoNation 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 AutoNation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoNation has no effect on the direction of Exelon i.e., Exelon and AutoNation go up and down completely randomly.
Pair Corralation between Exelon and AutoNation
Considering the 90-day investment horizon Exelon is expected to generate 7.78 times less return on investment than AutoNation. But when comparing it to its historical volatility, Exelon is 1.81 times less risky than AutoNation. It trades about 0.02 of its potential returns per unit of risk. AutoNation is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 15,903 in AutoNation on February 8, 2024 and sell it today you would earn a total of 524.00 from holding AutoNation or generate 3.29% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Exelon vs. AutoNation
Performance |
Timeline |
Exelon |
AutoNation |
Exelon and AutoNation Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Exelon and AutoNation
The main advantage of trading using opposite Exelon and AutoNation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exelon position performs unexpectedly, AutoNation 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 AutoNation will offset losses from the drop in AutoNation's long position.Exelon vs. Enel Chile SA | Exelon vs. Centrais Eltricas Brasileiras | Exelon vs. Central Puerto SA | Exelon vs. Portland General Electric |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
Fundamental Analysis View fundamental data based on most recent published financial statements | |
Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |