Correlation Between NYSE Composite and Pacific Gas
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Pacific Gas 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 NYSE Composite and Pacific Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Pacific Gas and, you can compare the effects of market volatilities on NYSE Composite and Pacific Gas 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 NYSE Composite with a short position of Pacific Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Pacific Gas.
Diversification Opportunities for NYSE Composite and Pacific Gas
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Pacific is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Pacific Gas and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Gas and NYSE Composite 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 NYSE Composite are associated (or correlated) with Pacific Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Gas has no effect on the direction of NYSE Composite i.e., NYSE Composite and Pacific Gas go up and down completely randomly.
Pair Corralation between NYSE Composite and Pacific Gas
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.01 times less return on investment than Pacific Gas. But when comparing it to its historical volatility, NYSE Composite is 1.55 times less risky than Pacific Gas. It trades about 0.15 of its potential returns per unit of risk. Pacific Gas and is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,184 in Pacific Gas and on September 2, 2024 and sell it today you would earn a total of 278.00 from holding Pacific Gas and or generate 12.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Pacific Gas and
Performance |
| Timeline |
NYSE Composite and Pacific Gas Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Pacific Gas and
Pair trading matchups for Pacific Gas
Pair Trading with NYSE Composite and Pacific Gas
The main advantage of trading using opposite NYSE Composite and Pacific Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Pacific Gas 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 Pacific Gas will offset losses from the drop in Pacific Gas' long position.| NYSE Composite vs. Simon Property Group | NYSE Composite vs. Merit Medical Systems | NYSE Composite vs. Catalent | NYSE Composite vs. Titan Machinery |
| Pacific Gas vs. Nextera Energy | Pacific Gas vs. Duke Energy | Pacific Gas vs. PGE Corp | Pacific Gas vs. Southern Company |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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