Modeling Tools | RenewTrack

ISO/RTO Correlation Heatmap

Pearson correlation of monthly average LMPs (2022-01 to 2025-06)

	ERCOT	PJM	CAISO	MISO	NYISO	ISO-NE	SPP
ERCOT	1.00	0.506	0.628	0.404	0.478	0.303	0.534
PJM	0.506	1.00	0.707	0.834	0.843	0.786	0.774
CAISO	0.628	0.707	1.00	0.704	0.709	0.613	0.715
MISO	0.404	0.834	0.704	1.00	0.855	0.778	0.823
NYISO	0.478	0.843	0.709	0.855	1.00	0.829	0.752
ISO-NE	0.303	0.786	0.613	0.778	0.829	1.00	0.677
SPP	0.534	0.774	0.715	0.823	0.752	0.677	1.00

Strong (>0.80)

Moderate (0.40-0.80)

Weak (<0.40)

Interconnection Structure

US grid topology drives correlation patterns

Eastern Interconnection

PJM, MISO, NYISO, ISO-NE, SPP — AC-synchronized, high internal correlation (0.55-0.85)

~0.72 avg

Texas Interconnection

ERCOT — islanded grid with minimal DC ties; low correlation with all other ISOs (0.25-0.40)

~0.32 avg

Western Interconnection

CAISO — separate AC grid from Eastern; moderate correlation via gas price linkage (0.35-0.50)

~0.42 avg

Key insight: The three US interconnections create natural portfolio diversification boundaries. Eastern ISO pairs show the highest cross-market correlation (PJM-NYISO ~0.85), while ERCOT-to-anything pairs offer the strongest diversification benefit.

Modeling & Analysis

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Cross-ISO Correlation Modeling

ISO/RTO Correlation Heatmap

Interconnection Structure

Cross-ISO Correlation Modeling

ISO/RTO Correlation Heatmap

Interconnection Structure