Correlation Between Entergy and Pacific Gas
Can any of the company-specific risk be diversified away by investing in both Entergy and Pacific Gas 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 Entergy and Pacific Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Entergy and Pacific Gas and, you can compare the effects of market volatilities on Entergy and Pacific Gas 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 Entergy with a short position of Pacific Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entergy and Pacific Gas.
Diversification Opportunities for Entergy and Pacific Gas
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Entergy and Pacific is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Entergy and Pacific Gas and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Gas and Entergy 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 Entergy are associated (or correlated) with Pacific Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Gas has no effect on the direction of Entergy i.e., Entergy and Pacific Gas go up and down completely randomly.
Pair Corralation between Entergy and Pacific Gas
Considering the 90-day investment horizon Entergy is expected to generate 1.17 times more return on investment than Pacific Gas. However, Entergy is 1.17 times more volatile than Pacific Gas and. It trades about 0.17 of its potential returns per unit of risk. Pacific Gas and is currently generating about -0.15 per unit of risk. If you would invest 13,522 in Entergy on August 28, 2024 and sell it today you would earn a total of 1,728 from holding Entergy or generate 12.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 38.1% |
| Values | Daily Returns |
Entergy vs. Pacific Gas and
Performance |
| Timeline |
| Entergy |
| Pacific Gas |
Entergy and Pacific Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Entergy and Pacific Gas
The main advantage of trading using opposite Entergy and Pacific Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entergy position performs unexpectedly, Pacific Gas 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 Pacific Gas will offset losses from the drop in Pacific Gas' long position.The idea behind Entergy and Pacific Gas and pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Pacific Gas vs. Pacific Gas and | Pacific Gas vs. Pacific Gas and | Pacific Gas vs. Pacific Gas and | Pacific Gas vs. Pacific Gas and |
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 Stocks Directory module to find actively traded stocks across global markets.
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