Correlation Between Constellation Energy and Fidelity Growth

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

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

Diversification Opportunities for Constellation Energy and Fidelity Growth

0.4

Correlation Coefficient

Constellation Energy  Fidelity Growth

Very weak diversification

The 3 months correlation between Constellation and Fidelity is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Energy Corp and Fidelity Growth Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Growth Pany and Constellation 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 Constellation Energy Corp are associated (or correlated) with Fidelity Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Growth Pany has no effect on the direction of Constellation Energy i.e., Constellation Energy and Fidelity Growth go up and down completely randomly.

Pair Corralation between Constellation Energy and Fidelity Growth

Considering the 90-day investment horizon Constellation Energy Corp is expected to generate 1.91 times more return on investment than Fidelity Growth. However, Constellation Energy is 1.91 times more volatile than Fidelity Growth Pany. It trades about 0.24 of its potential returns per unit of risk. Fidelity Growth Pany is currently generating about 0.11 per unit of risk. If you would invest  17,050  in Constellation Energy Corp on February 28, 2024 and sell it today you would earn a total of  6,256  from holding Constellation Energy Corp or generate 36.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Constellation Energy Corp  vs.  Fidelity Growth Pany

Constellation Energy Corp

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Constellation Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak technical and fundamental indicators, Constellation Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Fidelity Growth Pany

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Growth Pany are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Fidelity Growth may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Constellation Energy and Fidelity Growth

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

The idea behind Constellation Energy Corp and Fidelity Growth Pany 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.