Correlation Between Exelon and Spring Valley

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

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

Diversification Opportunities for Exelon and Spring Valley

-0.37

Correlation Coefficient

Exelon  Spring Valley

Very good diversification

The 3 months correlation between Exelon and Spring is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Exelon and Spring Valley Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spring Valley Acquisition 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 Spring Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spring Valley Acquisition has no effect on the direction of Exelon i.e., Exelon and Spring Valley go up and down completely randomly.

Pair Corralation between Exelon and Spring Valley

Considering the 90-day investment horizon Exelon is expected to under-perform the Spring Valley. But the stock apears to be less risky and, when comparing its historical volatility, Exelon is 14.5 times less risky than Spring Valley. The stock trades about -0.07 of its potential returns per unit of risk. The Spring Valley Acquisition is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  8.83  in Spring Valley Acquisition on April 21, 2025 and sell it today you would earn a total of  5.17  from holding Spring Valley Acquisition or generate 58.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	66.67%
Values	Daily Returns

Exelon  vs.  Spring Valley Acquisition

Exelon

Risk-Adjusted Performance

Very Weak

Over the last 90 days Exelon has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Spring Valley Acquisition

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Spring Valley Acquisition are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain forward indicators, Spring Valley reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Exelon and Spring Valley

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

The idea behind Exelon and Spring Valley Acquisition 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.