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Is FirstEnergy's Rally Driven By Low U.S. Treasury Yields?

Shares of FirstEnergy (FE) have added nearly 30% to their value in the past six months. The common notion is that falling U.S. treasury yields tend to increase the demand for utility companies such as FirstEnergy. But is this the case? Also, what are some of the other factors that could drive up the price of FirstEnergy?

Do U.S. treasury yields matter?

To answer this question, let's examine the relation of the 10 year treasury yield and the movement in FirstEnergy's stock over the last couple of years.

Source of data taken from Google Finance and U.S. Treasury

At first glance we can see in times when treasury yields have gone down, as was the case in recent months, the stock of FirstEnergy rallied and vice versa.

But after reviewing the linear correlation between the two sets of data - the correlation for the period was only -0.05 - it's… Read More …