Correlation Between Manila Electric and PXP Energy
Can any of the company-specific risk be diversified away by investing in both Manila Electric and PXP Energy 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 Manila Electric and PXP Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Manila Electric Co and PXP Energy Corp, you can compare the effects of market volatilities on Manila Electric and PXP Energy 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 Manila Electric with a short position of PXP Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manila Electric and PXP Energy.
Diversification Opportunities for Manila Electric and PXP Energy
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Manila and PXP is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Manila Electric Co and PXP Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PXP Energy Corp and Manila Electric 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 Manila Electric Co are associated (or correlated) with PXP Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PXP Energy Corp has no effect on the direction of Manila Electric i.e., Manila Electric and PXP Energy go up and down completely randomly.
Pair Corralation between Manila Electric and PXP Energy
Assuming the 90 days trading horizon Manila Electric Co is expected to generate 1.52 times more return on investment than PXP Energy. However, Manila Electric is 1.52 times more volatile than PXP Energy Corp. It trades about -0.03 of its potential returns per unit of risk. PXP Energy Corp is currently generating about -0.27 per unit of risk. If you would invest 49,000 in Manila Electric Co on September 1, 2024 and sell it today you would lose (1,100) from holding Manila Electric Co or give up 2.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Manila Electric Co vs. PXP Energy Corp
Performance |
| Timeline |
| Manila Electric |
| PXP Energy Corp |
Manila Electric and PXP Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manila Electric and PXP Energy
The main advantage of trading using opposite Manila Electric and PXP Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manila Electric position performs unexpectedly, PXP Energy 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 PXP Energy will offset losses from the drop in PXP Energy's long position.| Manila Electric vs. Lepanto Consolidated Mining | Manila Electric vs. Alliance Select Foods | Manila Electric vs. Philippine Savings Bank | Manila Electric vs. Converge Information Communications |
| PXP Energy vs. SM Investments Corp | PXP Energy vs. San Miguel Pure | PXP Energy vs. Ayala Corp | PXP Energy vs. Ayala Land |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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