Correlation Between First Robinson and PGE Corp
Can any of the company-specific risk be diversified away by investing in both First Robinson 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 First Robinson and PGE Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Robinson Financial and PGE Corp, you can compare the effects of market volatilities on First Robinson 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 First Robinson with a short position of PGE Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Robinson and PGE Corp.
Diversification Opportunities for First Robinson and PGE Corp
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and PGE is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding First Robinson Financial and PGE Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGE Corp and First Robinson 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 First Robinson Financial 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 First Robinson i.e., First Robinson and PGE Corp go up and down completely randomly.
Pair Corralation between First Robinson and PGE Corp
Given the investment horizon of 90 days First Robinson is expected to generate 3.03 times less return on investment than PGE Corp. But when comparing it to its historical volatility, First Robinson Financial is 9.21 times less risky than PGE Corp. It trades about 0.32 of its potential returns per unit of risk. PGE Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,995 in PGE Corp on September 4, 2024 and sell it today you would earn a total of 60.00 from holding PGE Corp or generate 3.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
First Robinson Financial vs. PGE Corp
Performance |
| Timeline |
| First Robinson Financial |
| PGE Corp |
First Robinson and PGE Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Robinson and PGE Corp
The main advantage of trading using opposite First Robinson and PGE Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Robinson 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.| First Robinson vs. Boston Omaha Corp | First Robinson vs. Deluxe | First Robinson vs. One Gas | First Robinson vs. Atmos 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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