Correlation Between Exelon and SCE Trust

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

By analyzing existing cross correlation between Exelon and SCE Trust VI, you can compare the effects of market volatilities on Exelon and SCE Trust 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 SCE Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exelon and SCE Trust.

Diversification Opportunities for Exelon and SCE Trust

-0.7

Correlation Coefficient

Exelon  SCE Trust

Excellent diversification

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

Pair Corralation between Exelon and SCE Trust

Considering the 90-day investment horizon Exelon is expected to under-perform the SCE Trust. In addition to that, Exelon is 2.23 times more volatile than SCE Trust VI. It trades about -0.23 of its total potential returns per unit of risk. SCE Trust VI is currently generating about -0.12 per unit of volatility. If you would invest  1,656  in SCE Trust VI on February 11, 2025 and sell it today you would lose (23.00) from holding SCE Trust VI or give up 1.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Exelon  vs.  SCE Trust VI

Exelon

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Exelon are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Exelon is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

SCE Trust VI

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Exelon and SCE Trust

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

The idea behind Exelon and SCE Trust VI 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.