Correlation Between Genie Energy and Exelon

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

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

Diversification Opportunities for Genie Energy and Exelon

0.66

Correlation Coefficient

Genie Energy  Exelon

Poor diversification

The 3 months correlation between Genie and Exelon is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Genie Energy and Exelon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exelon and Genie 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 Genie Energy 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 Genie Energy i.e., Genie Energy and Exelon go up and down completely randomly.

Pair Corralation between Genie Energy and Exelon

Considering the 90-day investment horizon Genie Energy is expected to generate 1.55 times more return on investment than Exelon. However, Genie Energy is 1.55 times more volatile than Exelon. It trades about -0.19 of its potential returns per unit of risk. Exelon is currently generating about -0.31 per unit of risk. If you would invest  1,581  in Genie Energy on September 19, 2024 and sell it today you would lose (106.00) from holding Genie Energy or give up 6.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Genie Energy  vs.  Exelon

Genie Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genie Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Exelon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exelon has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Exelon is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Genie Energy and Exelon

The main advantage of trading using opposite Genie Energy and Exelon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genie Energy 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.

The idea behind Genie Energy and Exelon 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.

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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.