Correlation Between Constellation Energy and Apple

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

By analyzing existing cross correlation between Constellation Energy and Apple Inc, you can compare the effects of market volatilities on Constellation Energy and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Energy and Apple.

Diversification Opportunities for Constellation Energy and Apple

-0.02

Correlation Coefficient

Constellation Energy  Apple

Good diversification

The 3 months correlation between Constellation and Apple is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Energy and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Constellation Energy i.e., Constellation Energy and Apple go up and down completely randomly.

Pair Corralation between Constellation Energy and Apple

Assuming the 90 days horizon Constellation Energy is expected to generate 4.05 times more return on investment than Apple. However, Constellation Energy is 4.05 times more volatile than Apple Inc. It trades about 0.06 of its potential returns per unit of risk. Apple Inc is currently generating about -0.01 per unit of risk. If you would invest  22,470  in Constellation Energy on October 11, 2024 and sell it today you would earn a total of  575.00  from holding Constellation Energy or generate 2.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Constellation Energy  vs.  Apple Inc

Constellation Energy

Risk-Adjusted Performance

0 of 100

Insignificant

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

Apple Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Apple unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Constellation Energy and Apple

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

The idea behind Constellation Energy and Apple Inc 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 CEOs Directory module to screen CEOs from public companies around the world.