Correlation Between Public Service and Las Vegas
Can any of the company-specific risk be diversified away by investing in both Public Service and Las Vegas 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 Public Service and Las Vegas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Public Service Enterprise and Las Vegas Sands, you can compare the effects of market volatilities on Public Service and Las Vegas 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 Public Service with a short position of Las Vegas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Service and Las Vegas.
Diversification Opportunities for Public Service and Las Vegas
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Public and Las is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Public Service Enterprise and Las Vegas Sands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Las Vegas Sands and Public Service 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 Public Service Enterprise are associated (or correlated) with Las Vegas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Las Vegas Sands has no effect on the direction of Public Service i.e., Public Service and Las Vegas go up and down completely randomly.
Pair Corralation between Public Service and Las Vegas
Assuming the 90 days trading horizon Public Service Enterprise is expected to generate 0.68 times more return on investment than Las Vegas. However, Public Service Enterprise is 1.48 times less risky than Las Vegas. It trades about 0.07 of its potential returns per unit of risk. Las Vegas Sands is currently generating about 0.02 per unit of risk. If you would invest 5,882 in Public Service Enterprise on September 23, 2024 and sell it today you would earn a total of 2,553 from holding Public Service Enterprise or generate 43.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.78% |
| Values | Daily Returns |
Public Service Enterprise vs. Las Vegas Sands
Performance |
| Timeline |
| Public Service Enterprise |
| Las Vegas Sands |
Public Service and Las Vegas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Public Service and Las Vegas
The main advantage of trading using opposite Public Service and Las Vegas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Service position performs unexpectedly, Las Vegas 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 Las Vegas will offset losses from the drop in Las Vegas' long position.| Public Service vs. Uniper SE | Public Service vs. Mulberry Group PLC | Public Service vs. London Security Plc | Public Service vs. Triad Group PLC |
| Las Vegas vs. Uniper SE | Las Vegas vs. Mulberry Group PLC | Las Vegas vs. London Security Plc | Las Vegas vs. Triad Group PLC |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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