Correlation Between Spirent Communications and PG E
Can any of the company-specific risk be diversified away by investing in both Spirent Communications and PG E 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 Spirent Communications and PG E into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and PG E P6, you can compare the effects of market volatilities on Spirent Communications and PG E 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 Spirent Communications with a short position of PG E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and PG E.
Diversification Opportunities for Spirent Communications and PG E
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Spirent and PCG6 is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and PG E P6 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PG E P6 and Spirent Communications 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 Spirent Communications plc are associated (or correlated) with PG E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PG E P6 has no effect on the direction of Spirent Communications i.e., Spirent Communications and PG E go up and down completely randomly.
Pair Corralation between Spirent Communications and PG E
Assuming the 90 days horizon Spirent Communications is expected to generate 2.74 times less return on investment than PG E. In addition to that, Spirent Communications is 2.8 times more volatile than PG E P6. It trades about 0.01 of its total potential returns per unit of risk. PG E P6 is currently generating about 0.05 per unit of volatility. If you would invest 1,594 in PG E P6 on September 14, 2024 and sell it today you would earn a total of 626.00 from holding PG E P6 or generate 39.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. PG E P6
Performance |
| Timeline |
| Spirent Communications |
| PG E P6 |
Spirent Communications and PG E Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and PG E
The main advantage of trading using opposite Spirent Communications and PG E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications position performs unexpectedly, PG E 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 PG E will offset losses from the drop in PG E's long position.| Spirent Communications vs. SERI INDUSTRIAL EO | Spirent Communications vs. LION ONE METALS | Spirent Communications vs. AWILCO DRILLING PLC | Spirent Communications vs. GALENA MINING LTD |
| PG E vs. Entravision Communications | PG E vs. Fukuyama Transporting Co | PG E vs. Transport International Holdings | PG E vs. Spirent Communications 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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