Correlation Between Empresa Distribuidora and PGE Corp
Can any of the company-specific risk be diversified away by investing in both Empresa Distribuidora 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 Empresa Distribuidora and PGE Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empresa Distribuidora y and PGE Corp, you can compare the effects of market volatilities on Empresa Distribuidora 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 Empresa Distribuidora with a short position of PGE Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empresa Distribuidora and PGE Corp.
Diversification Opportunities for Empresa Distribuidora and PGE Corp
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Empresa and PGE is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Empresa Distribuidora y and PGE Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGE Corp and Empresa Distribuidora 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 Empresa Distribuidora y 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 Empresa Distribuidora i.e., Empresa Distribuidora and PGE Corp go up and down completely randomly.
Pair Corralation between Empresa Distribuidora and PGE Corp
Considering the 90-day investment horizon Empresa Distribuidora y is expected to generate 3.46 times more return on investment than PGE Corp. However, Empresa Distribuidora is 3.46 times more volatile than PGE Corp. It trades about 0.52 of its potential returns per unit of risk. PGE Corp is currently generating about 0.38 per unit of risk. If you would invest 2,780 in Empresa Distribuidora y on August 31, 2024 and sell it today you would earn a total of 1,049 from holding Empresa Distribuidora y or generate 37.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Empresa Distribuidora y vs. PGE Corp
Performance |
| Timeline |
| Empresa Distribuidora |
| PGE Corp |
Empresa Distribuidora and PGE Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empresa Distribuidora and PGE Corp
The main advantage of trading using opposite Empresa Distribuidora and PGE Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empresa Distribuidora 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.| Empresa Distribuidora vs. Centrais Electricas Brasileiras | Empresa Distribuidora vs. Enel Chile SA | Empresa Distribuidora vs. Korea Electric Power | Empresa Distribuidora vs. Genie Energy |
| PGE Corp vs. Consolidated Edison | PGE Corp vs. Southern Company | PGE Corp vs. Entergy | PGE Corp vs. Pinnacle West Capital |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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