Correlation Between PGE and Consolidated Edison
Can any of the company-specific risk be diversified away by investing in both PGE and Consolidated Edison 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 PGE and Consolidated Edison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PGE Corporation and Consolidated Edison, you can compare the effects of market volatilities on PGE and Consolidated Edison 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 PGE with a short position of Consolidated Edison. Check out your portfolio center. Please also check ongoing floating volatility patterns of PGE and Consolidated Edison.
Diversification Opportunities for PGE and Consolidated Edison
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between PGE and Consolidated is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding PGE Corp. and Consolidated Edison in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Edison and PGE 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 PGE Corporation are associated (or correlated) with Consolidated Edison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Edison has no effect on the direction of PGE i.e., PGE and Consolidated Edison go up and down completely randomly.
Pair Corralation between PGE and Consolidated Edison
Assuming the 90 days horizon PGE Corporation is expected to under-perform the Consolidated Edison. In addition to that, PGE is 3.96 times more volatile than Consolidated Edison. It trades about -0.16 of its total potential returns per unit of risk. Consolidated Edison is currently generating about 0.25 per unit of volatility. If you would invest 8,618 in Consolidated Edison on October 20, 2024 and sell it today you would earn a total of 328.00 from holding Consolidated Edison or generate 3.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PGE Corp. vs. Consolidated Edison
Performance |
| Timeline |
| PGE Corporation |
| Consolidated Edison |
PGE and Consolidated Edison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PGE and Consolidated Edison
The main advantage of trading using opposite PGE and Consolidated Edison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PGE position performs unexpectedly, Consolidated Edison 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 Consolidated Edison will offset losses from the drop in Consolidated Edison's long position.The idea behind PGE Corporation and Consolidated Edison pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Consolidated Edison vs. NextEra Energy | Consolidated Edison vs. The Southern | Consolidated Edison vs. VERBUND AG | Consolidated Edison vs. American Electric Power |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |