Correlation Between Xcel Energy and TXNM Energy,

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

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

Diversification Opportunities for Xcel Energy and TXNM Energy,

0.7

Correlation Coefficient

Xcel Energy  TXNM Energy,

Poor diversification

The 3 months correlation between Xcel and TXNM is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Xcel Energy and TXNM Energy, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TXNM Energy, and Xcel 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 Xcel Energy are associated (or correlated) with TXNM Energy,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TXNM Energy, has no effect on the direction of Xcel Energy i.e., Xcel Energy and TXNM Energy, go up and down completely randomly.

Pair Corralation between Xcel Energy and TXNM Energy,

Considering the 90-day investment horizon Xcel Energy is expected to under-perform the TXNM Energy,. But the stock apears to be less risky and, when comparing its historical volatility, Xcel Energy is 1.05 times less risky than TXNM Energy,. The stock trades about -0.03 of its potential returns per unit of risk. The TXNM Energy, is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  4,864  in TXNM Energy, on November 28, 2024 and sell it today you would earn a total of  305.00  from holding TXNM Energy, or generate 6.27% return on investment over 90 days.

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

Xcel Energy  vs.  TXNM Energy,

Xcel Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xcel Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Xcel Energy is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

TXNM Energy,

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TXNM Energy, are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, TXNM Energy, may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Xcel Energy and TXNM Energy,

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

The idea behind Xcel Energy and TXNM Energy, 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.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .