Correlation Between Consolidated Edison and Pampa Energia
Can any of the company-specific risk be diversified away by investing in both Consolidated Edison and Pampa Energia 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 Consolidated Edison and Pampa Energia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consolidated Edison and Pampa Energia SA, you can compare the effects of market volatilities on Consolidated Edison and Pampa Energia 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 Consolidated Edison with a short position of Pampa Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consolidated Edison and Pampa Energia.
Diversification Opportunities for Consolidated Edison and Pampa Energia
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Consolidated and Pampa is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Edison and Pampa Energia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pampa Energia SA and Consolidated Edison 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 Consolidated Edison are associated (or correlated) with Pampa Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pampa Energia SA has no effect on the direction of Consolidated Edison i.e., Consolidated Edison and Pampa Energia go up and down completely randomly.
Pair Corralation between Consolidated Edison and Pampa Energia
Allowing for the 90-day total investment horizon Consolidated Edison is expected to under-perform the Pampa Energia. But the stock apears to be less risky and, when comparing its historical volatility, Consolidated Edison is 1.92 times less risky than Pampa Energia. The stock trades about -0.21 of its potential returns per unit of risk. The Pampa Energia SA is currently generating about 0.56 of returns per unit of risk over similar time horizon. If you would invest 6,700 in Pampa Energia SA on August 28, 2024 and sell it today you would earn a total of 1,563 from holding Pampa Energia SA or generate 23.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consolidated Edison vs. Pampa Energia SA
Performance |
| Timeline |
| Consolidated Edison |
| Pampa Energia SA |
Consolidated Edison and Pampa Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consolidated Edison and Pampa Energia
The main advantage of trading using opposite Consolidated Edison and Pampa Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Edison position performs unexpectedly, Pampa Energia 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 Pampa Energia will offset losses from the drop in Pampa Energia's long position.| Consolidated Edison vs. Duke Energy | Consolidated Edison vs. Dominion Energy | Consolidated Edison vs. American Electric Power | Consolidated Edison vs. Nextera Energy |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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