Correlation Between Iberdrola and PacifiCorp
Can any of the company-specific risk be diversified away by investing in both Iberdrola and PacifiCorp 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 Iberdrola and PacifiCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iberdrola SA and PacifiCorp, you can compare the effects of market volatilities on Iberdrola and PacifiCorp 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 Iberdrola with a short position of PacifiCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iberdrola and PacifiCorp.
Diversification Opportunities for Iberdrola and PacifiCorp
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Iberdrola and PacifiCorp is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Iberdrola SA and PacifiCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PacifiCorp and Iberdrola 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 Iberdrola SA are associated (or correlated) with PacifiCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PacifiCorp has no effect on the direction of Iberdrola i.e., Iberdrola and PacifiCorp go up and down completely randomly.
Pair Corralation between Iberdrola and PacifiCorp
Assuming the 90 days horizon Iberdrola SA is expected to generate 0.37 times more return on investment than PacifiCorp. However, Iberdrola SA is 2.67 times less risky than PacifiCorp. It trades about -0.08 of its potential returns per unit of risk. PacifiCorp is currently generating about -0.07 per unit of risk. If you would invest 5,620 in Iberdrola SA on September 13, 2024 and sell it today you would lose (81.00) from holding Iberdrola SA or give up 1.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iberdrola SA vs. PacifiCorp
Performance |
| Timeline |
| Iberdrola SA |
| PacifiCorp |
Iberdrola and PacifiCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iberdrola and PacifiCorp
The main advantage of trading using opposite Iberdrola and PacifiCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iberdrola position performs unexpectedly, PacifiCorp 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 PacifiCorp will offset losses from the drop in PacifiCorp's long position.| Iberdrola vs. Companhia Paranaense de | Iberdrola vs. Otter Tail | Iberdrola vs. Brookfield Infrastructure Partners | Iberdrola vs. RWE AG PK |
| PacifiCorp vs. Emerson Electric | PacifiCorp vs. Cementos Pacasmayo SAA | PacifiCorp vs. Tyson Foods | PacifiCorp vs. Taiwan Semiconductor Manufacturing |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |