Correlation Between MGE Energy and Public Service
Can any of the company-specific risk be diversified away by investing in both MGE Energy and Public Service 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 MGE Energy and Public Service into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGE Energy and Public Service Enterprise, you can compare the effects of market volatilities on MGE Energy and Public Service 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 MGE Energy with a short position of Public Service. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGE Energy and Public Service.
Diversification Opportunities for MGE Energy and Public Service
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MGE and Public is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding MGE Energy and Public Service Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Service Enterprise and MGE 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 MGE Energy are associated (or correlated) with Public Service. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Service Enterprise has no effect on the direction of MGE Energy i.e., MGE Energy and Public Service go up and down completely randomly.
Pair Corralation between MGE Energy and Public Service
Given the investment horizon of 90 days MGE Energy is expected to generate 1.14 times more return on investment than Public Service. However, MGE Energy is 1.14 times more volatile than Public Service Enterprise. It trades about 0.27 of its potential returns per unit of risk. Public Service Enterprise is currently generating about 0.05 per unit of risk. If you would invest 9,146 in MGE Energy on August 24, 2024 and sell it today you would earn a total of 1,267 from holding MGE Energy or generate 13.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGE Energy vs. Public Service Enterprise
Performance |
| Timeline |
| MGE Energy |
| Public Service Enterprise |
MGE Energy and Public Service Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGE Energy and Public Service
The main advantage of trading using opposite MGE Energy and Public Service positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGE Energy position performs unexpectedly, Public Service 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 Public Service will offset losses from the drop in Public Service's long position.| MGE Energy vs. CMS Energy | MGE Energy vs. Ameren Corp | MGE Energy vs. Pinnacle West Capital | MGE Energy vs. Evergy, |
| Public Service vs. Korea Electric Power | Public Service vs. Centrais Electricas Brasileiras | Public Service vs. MGE Energy | Public Service vs. IDACORP |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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