Correlation Between IDACORP and PNM Old

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

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

Diversification Opportunities for IDACORP and PNM Old

0.0

Correlation Coefficient

IDACORP  PNM Old

Pay attention - limited upside

The 3 months correlation between IDACORP and PNM is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding IDACORP and PNM Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PNM Old and IDACORP 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 IDACORP are associated (or correlated) with PNM Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PNM Old has no effect on the direction of IDACORP i.e., IDACORP and PNM Old go up and down completely randomly.

Pair Corralation between IDACORP and PNM Old

If you would invest  10,887  in IDACORP on December 27, 2024 and sell it today you would earn a total of  465.00  from holding IDACORP or generate 4.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

IDACORP  vs.  PNM Old

IDACORP

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in IDACORP are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, IDACORP is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

PNM Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days PNM Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, PNM Old is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IDACORP and PNM Old

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

The idea behind IDACORP and PNM Old 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.