Correlation Between SFL and CONSTELLATION

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

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

Diversification Opportunities for SFL and CONSTELLATION

0.36

Correlation Coefficient

SFL  CONSTELLATION

Weak diversification

The 3 months correlation between SFL and CONSTELLATION is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding SFL Corp. and CONSTELLATION ENERGY GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSTELLATION ENERGY and SFL 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 SFL Corporation are associated (or correlated) with CONSTELLATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONSTELLATION ENERGY has no effect on the direction of SFL i.e., SFL and CONSTELLATION go up and down completely randomly.

Pair Corralation between SFL and CONSTELLATION

Considering the 90-day investment horizon SFL Corporation is expected to generate 1.09 times more return on investment than CONSTELLATION. However, SFL is 1.09 times more volatile than CONSTELLATION ENERGY GROUP. It trades about -0.13 of its potential returns per unit of risk. CONSTELLATION ENERGY GROUP is currently generating about -0.15 per unit of risk. If you would invest  1,140  in SFL Corporation on October 3, 2024 and sell it today you would lose (118.00) from holding SFL Corporation or give up 10.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	54.84%
Values	Daily Returns

SFL Corp.  vs.  CONSTELLATION ENERGY GROUP

SFL Corporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SFL Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

CONSTELLATION ENERGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CONSTELLATION ENERGY GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for CONSTELLATION ENERGY GROUP investors.

Pair Trading with SFL and CONSTELLATION

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

The idea behind SFL Corporation and CONSTELLATION ENERGY GROUP 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.