Correlation Between Magnite and PacifiCorp
Can any of the company-specific risk be diversified away by investing in both Magnite 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 Magnite and PacifiCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magnite and PacifiCorp, you can compare the effects of market volatilities on Magnite 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 Magnite with a short position of PacifiCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnite and PacifiCorp.
Diversification Opportunities for Magnite and PacifiCorp
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Magnite and PacifiCorp is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Magnite and PacifiCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PacifiCorp and Magnite 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 Magnite 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 Magnite i.e., Magnite and PacifiCorp go up and down completely randomly.
Pair Corralation between Magnite and PacifiCorp
Given the investment horizon of 90 days Magnite is expected to under-perform the PacifiCorp. But the stock apears to be less risky and, when comparing its historical volatility, Magnite is 1.55 times less risky than PacifiCorp. The stock trades about -0.04 of its potential returns per unit of risk. The PacifiCorp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 17,621 in PacifiCorp on October 23, 2024 and sell it today you would earn a total of 379.00 from holding PacifiCorp or generate 2.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Magnite vs. PacifiCorp
Performance |
| Timeline |
| Magnite |
| PacifiCorp |
Magnite and PacifiCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magnite and PacifiCorp
The main advantage of trading using opposite Magnite and PacifiCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnite 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.| Magnite vs. Deluxe | Magnite vs. Clear Channel Outdoor | Magnite vs. Entravision Communications | Magnite vs. Innovid Corp |
| PacifiCorp vs. Guangdong Investment Limited | PacifiCorp vs. Sphere Entertainment Co | PacifiCorp vs. Playtika Holding Corp | PacifiCorp vs. Weibo Corp |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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