Correlation Between Thunder Bridge and CONSTELLATION

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

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

Diversification Opportunities for Thunder Bridge and CONSTELLATION

-0.55

Correlation Coefficient

Thunder Bridge  CONSTELLATION

Excellent diversification

The 3 months correlation between Thunder and CONSTELLATION is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Thunder Bridge Capital and CONSTELLATION ENERGY GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSTELLATION ENERGY and Thunder Bridge 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 Thunder Bridge Capital 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 Thunder Bridge i.e., Thunder Bridge and CONSTELLATION go up and down completely randomly.

Pair Corralation between Thunder Bridge and CONSTELLATION

Assuming the 90 days horizon Thunder Bridge Capital is expected to generate 1.38 times more return on investment than CONSTELLATION. However, Thunder Bridge is 1.38 times more volatile than CONSTELLATION ENERGY GROUP. It trades about 0.06 of its potential returns per unit of risk. CONSTELLATION ENERGY GROUP is currently generating about 0.01 per unit of risk. If you would invest  1,075  in Thunder Bridge Capital on September 30, 2024 and sell it today you would earn a total of  167.00  from holding Thunder Bridge Capital or generate 15.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	68.42%
Values	Daily Returns

Thunder Bridge Capital  vs.  CONSTELLATION ENERGY GROUP

Thunder Bridge Capital

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Thunder Bridge Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, Thunder Bridge unveiled solid returns over the last few months and may actually be approaching a breakup point.

CONSTELLATION ENERGY

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CONSTELLATION ENERGY GROUP are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, CONSTELLATION may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Thunder Bridge and CONSTELLATION

The main advantage of trading using opposite Thunder Bridge and CONSTELLATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thunder Bridge 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 Thunder Bridge Capital 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.