Correlation Between Constellation Energy and UGE International

Can any of the company-specific risk be diversified away by investing in both Constellation Energy and UGE International 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 Constellation Energy and UGE International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Constellation Energy Corp and UGE International, you can compare the effects of market volatilities on Constellation Energy and UGE International 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 Constellation Energy with a short position of UGE International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Energy and UGE International.

Diversification Opportunities for Constellation Energy and UGE International

0.69

Correlation Coefficient

Constellation Energy  UGE International

Poor diversification

The 3 months correlation between Constellation and UGE is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Energy Corp and UGE International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UGE International and Constellation 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 Constellation Energy Corp are associated (or correlated) with UGE International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UGE International has no effect on the direction of Constellation Energy i.e., Constellation Energy and UGE International go up and down completely randomly.

Pair Corralation between Constellation Energy and UGE International

If you would invest  19,567  in Constellation Energy Corp on September 13, 2024 and sell it today you would earn a total of  4,093  from holding Constellation Energy Corp or generate 20.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

Constellation Energy Corp  vs.  UGE International

Constellation Energy Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Constellation Energy Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Constellation Energy reported solid returns over the last few months and may actually be approaching a breakup point.

UGE International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UGE International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, UGE International is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Constellation Energy and UGE International

The main advantage of trading using opposite Constellation Energy and UGE International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Energy position performs unexpectedly, UGE International 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 UGE International will offset losses from the drop in UGE International's long position.

The idea behind Constellation Energy Corp and UGE International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.