Correlation Between Bel Fuse and PacifiCorp
Can any of the company-specific risk be diversified away by investing in both Bel Fuse 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 Bel Fuse and PacifiCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bel Fuse A and PacifiCorp, you can compare the effects of market volatilities on Bel Fuse 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 Bel Fuse with a short position of PacifiCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bel Fuse and PacifiCorp.
Diversification Opportunities for Bel Fuse and PacifiCorp
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bel and PacifiCorp is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Bel Fuse A and PacifiCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PacifiCorp and Bel Fuse 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 Bel Fuse A 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 Bel Fuse i.e., Bel Fuse and PacifiCorp go up and down completely randomly.
Pair Corralation between Bel Fuse and PacifiCorp
Assuming the 90 days horizon Bel Fuse A is expected to generate 0.57 times more return on investment than PacifiCorp. However, Bel Fuse A is 1.76 times less risky than PacifiCorp. It trades about 0.09 of its potential returns per unit of risk. PacifiCorp is currently generating about 0.03 per unit of risk. If you would invest 8,906 in Bel Fuse A on September 12, 2024 and sell it today you would earn a total of 1,015 from holding Bel Fuse A or generate 11.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bel Fuse A vs. PacifiCorp
Performance |
| Timeline |
| Bel Fuse A |
| PacifiCorp |
Bel Fuse and PacifiCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bel Fuse and PacifiCorp
The main advantage of trading using opposite Bel Fuse and PacifiCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bel Fuse 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.The idea behind Bel Fuse A and PacifiCorp 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.| PacifiCorp vs. Kaltura | PacifiCorp vs. Summit Hotel Properties | PacifiCorp vs. Morgan Stanley | PacifiCorp vs. Datadog |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Commodity Directory Find actively traded commodities issued by global exchanges |