Correlation Between Avista and PacifiCorp
Can any of the company-specific risk be diversified away by investing in both Avista and PacifiCorp 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 Avista and PacifiCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avista and PacifiCorp, you can compare the effects of market volatilities on Avista and PacifiCorp 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 Avista with a short position of PacifiCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avista and PacifiCorp.
Diversification Opportunities for Avista and PacifiCorp
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Avista and PacifiCorp is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Avista and PacifiCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PacifiCorp and Avista 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 Avista are associated (or correlated) with PacifiCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PacifiCorp has no effect on the direction of Avista i.e., Avista and PacifiCorp go up and down completely randomly.
Pair Corralation between Avista and PacifiCorp
Considering the 90-day investment horizon Avista is expected to under-perform the PacifiCorp. But the stock apears to be less risky and, when comparing its historical volatility, Avista is 4.42 times less risky than PacifiCorp. The stock trades about 0.0 of its potential returns per unit of risk. The PacifiCorp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 17,125 in PacifiCorp on October 7, 2024 and sell it today you would earn a total of 875.00 from holding PacifiCorp or generate 5.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 80.24% |
| Values | Daily Returns |
Avista vs. PacifiCorp
Performance |
| Timeline |
| Avista |
| PacifiCorp |
Avista and PacifiCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avista and PacifiCorp
The main advantage of trading using opposite Avista and PacifiCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avista position performs unexpectedly, PacifiCorp 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 PacifiCorp will offset losses from the drop in PacifiCorp's long position.| Avista vs. Allete Inc | Avista vs. Black Hills | Avista vs. Montauk Renewables | Avista vs. Companhia Paranaense de |
| PacifiCorp vs. Townsquare Media | PacifiCorp vs. BOS Better Online | PacifiCorp vs. 51Talk Online Education | PacifiCorp vs. Magnite |
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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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