Correlation Between Eversource Energy and Portland General
Can any of the company-specific risk be diversified away by investing in both Eversource Energy and Portland General 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 Eversource Energy and Portland General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eversource Energy and Portland General Electric, you can compare the effects of market volatilities on Eversource Energy and Portland General 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 Eversource Energy with a short position of Portland General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eversource Energy and Portland General.
Diversification Opportunities for Eversource Energy and Portland General
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Eversource and Portland is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Eversource Energy and Portland General Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Portland General Electric and Eversource 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 Eversource Energy are associated (or correlated) with Portland General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Portland General Electric has no effect on the direction of Eversource Energy i.e., Eversource Energy and Portland General go up and down completely randomly.
Pair Corralation between Eversource Energy and Portland General
Allowing for the 90-day total investment horizon Eversource Energy is expected to generate 0.69 times more return on investment than Portland General. However, Eversource Energy is 1.44 times less risky than Portland General. It trades about 0.07 of its potential returns per unit of risk. Portland General Electric is currently generating about -0.1 per unit of risk. If you would invest 5,718 in Eversource Energy on October 24, 2024 and sell it today you would earn a total of 69.00 from holding Eversource Energy or generate 1.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eversource Energy vs. Portland General Electric
Performance |
| Timeline |
| Eversource Energy |
| Portland General Electric |
Eversource Energy and Portland General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eversource Energy and Portland General
The main advantage of trading using opposite Eversource Energy and Portland General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eversource Energy position performs unexpectedly, Portland General 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 Portland General will offset losses from the drop in Portland General's long position.| Eversource Energy vs. CenterPoint Energy | Eversource Energy vs. FirstEnergy | Eversource Energy vs. Pinnacle West Capital | Eversource Energy vs. Edison International |
| Portland General vs. MGE Energy | Portland General vs. CMS Energy | Portland General vs. OGE Energy | Portland General vs. DTE Energy |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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