Correlation Between PGE Corp and Consolidated Edison
Can any of the company-specific risk be diversified away by investing in both PGE Corp 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 Corp 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 Corp and Consolidated Edison, you can compare the effects of market volatilities on PGE Corp 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 Corp with a short position of Consolidated Edison. Check out your portfolio center. Please also check ongoing floating volatility patterns of PGE Corp and Consolidated Edison.
Diversification Opportunities for PGE Corp and Consolidated Edison
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PGE and Consolidated is -0.21. 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 Corp 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 Corp 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 Corp i.e., PGE Corp and Consolidated Edison go up and down completely randomly.
Pair Corralation between PGE Corp and Consolidated Edison
Considering the 90-day investment horizon PGE Corp is expected to generate 1.14 times more return on investment than Consolidated Edison. However, PGE Corp is 1.14 times more volatile than Consolidated Edison. It trades about 0.06 of its potential returns per unit of risk. Consolidated Edison is currently generating about 0.02 per unit of risk. If you would invest 1,529 in PGE Corp on August 24, 2024 and sell it today you would earn a total of 594.00 from holding PGE Corp or generate 38.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PGE Corp vs. Consolidated Edison
Performance |
| Timeline |
| PGE Corp |
| Consolidated Edison |
PGE Corp and Consolidated Edison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PGE Corp and Consolidated Edison
The main advantage of trading using opposite PGE Corp and Consolidated Edison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PGE Corp 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.| PGE Corp vs. Consolidated Edison | PGE Corp vs. Southern Company | PGE Corp vs. Entergy | PGE Corp vs. Pinnacle West Capital |
| Consolidated Edison vs. Korea Electric Power | Consolidated Edison vs. Centrais Electricas Brasileiras | Consolidated Edison vs. MGE Energy | Consolidated Edison vs. IDACORP |
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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