Correlation Between Pacific Gas and Southern Company
Can any of the company-specific risk be diversified away by investing in both Pacific Gas and Southern Company 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 Pacific Gas and Southern Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacific Gas and and Southern Company Series, you can compare the effects of market volatilities on Pacific Gas and Southern Company 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 Pacific Gas with a short position of Southern Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Gas and Southern Company.
Diversification Opportunities for Pacific Gas and Southern Company
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pacific and Southern is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Gas and and Southern Company Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Company and Pacific Gas 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 Pacific Gas and are associated (or correlated) with Southern Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Company has no effect on the direction of Pacific Gas i.e., Pacific Gas and Southern Company go up and down completely randomly.
Pair Corralation between Pacific Gas and Southern Company
Assuming the 90 days trading horizon Pacific Gas and is expected to generate 2.18 times more return on investment than Southern Company. However, Pacific Gas is 2.18 times more volatile than Southern Company Series. It trades about -0.02 of its potential returns per unit of risk. Southern Company Series is currently generating about -0.21 per unit of risk. If you would invest 1,997 in Pacific Gas and on August 28, 2024 and sell it today you would lose (7.00) from holding Pacific Gas and or give up 0.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 33.33% |
| Values | Daily Returns |
Pacific Gas and vs. Southern Company Series
Performance |
| Timeline |
| Pacific Gas |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Southern Company |
Pacific Gas and Southern Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacific Gas and Southern Company
The main advantage of trading using opposite Pacific Gas and Southern Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Gas position performs unexpectedly, Southern Company 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 Southern Company will offset losses from the drop in Southern Company's long position.| Pacific Gas vs. Pacific Gas and | Pacific Gas vs. Pacific Gas and | Pacific Gas vs. Pacific Gas and | Pacific Gas vs. Pacific Gas and |
| Southern Company vs. Southern Co | Southern Company vs. DTE Energy | Southern Company vs. Southern Co | Southern Company vs. Prudential Financial 4125 |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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