Correlation Between Black Hills and PacifiCorp
Can any of the company-specific risk be diversified away by investing in both Black Hills 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 Black Hills and PacifiCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Hills and PacifiCorp, you can compare the effects of market volatilities on Black Hills 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 Black Hills with a short position of PacifiCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Hills and PacifiCorp.
Diversification Opportunities for Black Hills and PacifiCorp
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Black and PacifiCorp is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Black Hills and PacifiCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PacifiCorp and Black Hills 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 Black Hills 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 Black Hills i.e., Black Hills and PacifiCorp go up and down completely randomly.
Pair Corralation between Black Hills and PacifiCorp
Considering the 90-day investment horizon Black Hills is expected to generate 6.25 times less return on investment than PacifiCorp. But when comparing it to its historical volatility, Black Hills is 3.93 times less risky than PacifiCorp. It trades about 0.07 of its potential returns per unit of risk. PacifiCorp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 10,723 in PacifiCorp on October 7, 2024 and sell it today you would earn a total of 7,277 from holding PacifiCorp or generate 67.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Hills vs. PacifiCorp
Performance |
| Timeline |
| Black Hills |
| PacifiCorp |
Black Hills and PacifiCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Hills and PacifiCorp
The main advantage of trading using opposite Black Hills and PacifiCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Hills 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.| Black Hills vs. NorthWestern | Black Hills vs. Avista | Black Hills vs. Otter Tail | Black Hills 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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |