Correlation Between FirstEnergy and PPL
Can any of the company-specific risk be diversified away by investing in both FirstEnergy and PPL 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 FirstEnergy and PPL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FirstEnergy and PPL Corporation, you can compare the effects of market volatilities on FirstEnergy and PPL 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 FirstEnergy with a short position of PPL. Check out your portfolio center. Please also check ongoing floating volatility patterns of FirstEnergy and PPL.
Diversification Opportunities for FirstEnergy and PPL
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FirstEnergy and PPL is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding FirstEnergy and PPL Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPL Corporation and FirstEnergy 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 FirstEnergy are associated (or correlated) with PPL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPL Corporation has no effect on the direction of FirstEnergy i.e., FirstEnergy and PPL go up and down completely randomly.
Pair Corralation between FirstEnergy and PPL
Allowing for the 90-day total investment horizon FirstEnergy is expected to generate 0.92 times more return on investment than PPL. However, FirstEnergy is 1.09 times less risky than PPL. It trades about 0.09 of its potential returns per unit of risk. PPL Corporation is currently generating about -0.06 per unit of risk. If you would invest 4,305 in FirstEnergy on September 4, 2025 and sell it today you would earn a total of 218.00 from holding FirstEnergy or generate 5.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FirstEnergy vs. PPL Corp.
Performance |
| Timeline |
| FirstEnergy |
| PPL Corporation |
FirstEnergy and PPL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FirstEnergy and PPL
The main advantage of trading using opposite FirstEnergy and PPL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FirstEnergy position performs unexpectedly, PPL 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 PPL will offset losses from the drop in PPL's long position.| FirstEnergy vs. Young Cos Brewery | FirstEnergy vs. China Resources Beer | FirstEnergy vs. Suntory Beverage Food | FirstEnergy vs. Elmos Semiconductor SE |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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