Correlation Between NRG Energy and SIMON
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By analyzing existing cross correlation between NRG Energy and SIMON PPTY GROUP, you can compare the effects of market volatilities on NRG Energy and SIMON 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 NRG Energy with a short position of SIMON. Check out your portfolio center. Please also check ongoing floating volatility patterns of NRG Energy and SIMON.
Diversification Opportunities for NRG Energy and SIMON
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between NRG and SIMON is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding NRG Energy and SIMON PPTY GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMON PPTY GROUP and NRG 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 NRG Energy are associated (or correlated) with SIMON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMON PPTY GROUP has no effect on the direction of NRG Energy i.e., NRG Energy and SIMON go up and down completely randomly.
Pair Corralation between NRG Energy and SIMON
Considering the 90-day investment horizon NRG Energy is expected to generate 2.08 times more return on investment than SIMON. However, NRG Energy is 2.08 times more volatile than SIMON PPTY GROUP. It trades about 0.12 of its potential returns per unit of risk. SIMON PPTY GROUP is currently generating about 0.04 per unit of risk. If you would invest 8,042 in NRG Energy on September 16, 2024 and sell it today you would earn a total of 1,456 from holding NRG Energy or generate 18.1% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 76.92% |
Values | Daily Returns |
NRG Energy vs. SIMON PPTY GROUP
Performance |
Timeline |
NRG Energy |
SIMON PPTY GROUP |
NRG Energy and SIMON Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NRG Energy and SIMON
The main advantage of trading using opposite NRG Energy and SIMON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NRG Energy position performs unexpectedly, SIMON 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 SIMON will offset losses from the drop in SIMON's long position.NRG Energy vs. TransAlta Corp | ||
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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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