Correlation Between Pacific Gas and Nextera Energy
Can any of the company-specific risk be diversified away by investing in both Pacific Gas and Nextera 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 Pacific Gas and Nextera Energy 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 Nextera Energy, you can compare the effects of market volatilities on Pacific Gas and Nextera 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 Pacific Gas with a short position of Nextera Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Gas and Nextera Energy.
Diversification Opportunities for Pacific Gas and Nextera Energy
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pacific and Nextera is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Gas and and Nextera Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextera Energy 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 Nextera Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextera Energy has no effect on the direction of Pacific Gas i.e., Pacific Gas and Nextera Energy go up and down completely randomly.
Pair Corralation between Pacific Gas and Nextera Energy
Assuming the 90 days trading horizon Pacific Gas and is expected to under-perform the Nextera Energy. In addition to that, Pacific Gas is 1.08 times more volatile than Nextera Energy. It trades about -0.15 of its total potential returns per unit of risk. Nextera Energy is currently generating about -0.07 per unit of volatility. If you would invest 4,628 in Nextera Energy on August 28, 2024 and sell it today you would lose (240.00) from holding Nextera Energy or give up 5.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 36.36% |
| Values | Daily Returns |
Pacific Gas and vs. Nextera Energy
Performance |
| Timeline |
| Pacific Gas |
| Nextera Energy |
Pacific Gas and Nextera Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacific Gas and Nextera Energy
The main advantage of trading using opposite Pacific Gas and Nextera Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Gas position performs unexpectedly, Nextera 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 Nextera Energy will offset losses from the drop in Nextera Energy'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 |
| Nextera Energy vs. Jacobs Solutions | Nextera Energy vs. Chester Mining | Nextera Energy vs. Enersys | Nextera Energy vs. Highway Holdings Limited |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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