Correlation Between Exelon and National Grid
Can any of the company-specific risk be diversified away by investing in both Exelon and National Grid 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 Exelon and National Grid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exelon and National Grid PLC, you can compare the effects of market volatilities on Exelon and National Grid 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 Exelon with a short position of National Grid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exelon and National Grid.
Diversification Opportunities for Exelon and National Grid
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Exelon and National is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Exelon and National Grid PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Grid PLC and Exelon 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 Exelon are associated (or correlated) with National Grid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Grid PLC has no effect on the direction of Exelon i.e., Exelon and National Grid go up and down completely randomly.
Pair Corralation between Exelon and National Grid
Considering the 90-day investment horizon Exelon is expected to generate 2.21 times less return on investment than National Grid. In addition to that, Exelon is 1.1 times more volatile than National Grid PLC. It trades about 0.08 of its total potential returns per unit of risk. National Grid PLC is currently generating about 0.19 per unit of volatility. If you would invest 6,795 in National Grid PLC on September 4, 2025 and sell it today you would earn a total of 769.00 from holding National Grid PLC or generate 11.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exelon vs. National Grid PLC
Performance |
| Timeline |
| Exelon |
| National Grid PLC |
Exelon and National Grid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exelon and National Grid
The main advantage of trading using opposite Exelon and National Grid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exelon position performs unexpectedly, National Grid 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 National Grid will offset losses from the drop in National Grid's long position.| Exelon vs. Video Display | Exelon vs. Xtera Communications | Exelon vs. Meta Materials | Exelon vs. Hyster Yale Materials Handling |
| National Grid vs. AGNC Investment Corp | National Grid vs. Vinci Partners Investments | National Grid vs. China Clean Energy | National Grid vs. AG Mortgage 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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