Correlation Between Dominion Energy and PGE Corp
Can any of the company-specific risk be diversified away by investing in both Dominion Energy and PGE Corp 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 Dominion Energy and PGE Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dominion Energy and PGE Corp, you can compare the effects of market volatilities on Dominion Energy and PGE Corp 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 Dominion Energy with a short position of PGE Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dominion Energy and PGE Corp.
Diversification Opportunities for Dominion Energy and PGE Corp
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dominion and PGE is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Dominion Energy and PGE Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGE Corp and Dominion Energy 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 Dominion Energy are associated (or correlated) with PGE Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGE Corp has no effect on the direction of Dominion Energy i.e., Dominion Energy and PGE Corp go up and down completely randomly.
Pair Corralation between Dominion Energy and PGE Corp
If you would invest 15,684 in PGE Corp on August 28, 2024 and sell it today you would earn a total of 0.00 from holding PGE Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Dominion Energy vs. PGE Corp
Performance |
| Timeline |
| Dominion Energy |
| PGE Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Dominion Energy and PGE Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dominion Energy and PGE Corp
The main advantage of trading using opposite Dominion Energy and PGE Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dominion Energy position performs unexpectedly, PGE Corp 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 PGE Corp will offset losses from the drop in PGE Corp's long position.| Dominion Energy vs. Southern Company | Dominion Energy vs. American Electric Power | Dominion Energy vs. Nextera Energy | Dominion Energy vs. Consolidated Edison |
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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