Correlation Between PGE Corp and Entergy
Can any of the company-specific risk be diversified away by investing in both PGE Corp and Entergy 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 Entergy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PGE Corp and Entergy, you can compare the effects of market volatilities on PGE Corp and Entergy 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 Entergy. Check out your portfolio center. Please also check ongoing floating volatility patterns of PGE Corp and Entergy.
Diversification Opportunities for PGE Corp and Entergy
Pay attention - limited upside
The 3 months correlation between PGE and Entergy is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding PGE Corp and Entergy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entergy 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 Entergy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entergy has no effect on the direction of PGE Corp i.e., PGE Corp and Entergy go up and down completely randomly.
Pair Corralation between PGE Corp and Entergy
Considering the 90-day investment horizon PGE Corp is expected to under-perform the Entergy. In addition to that, PGE Corp is 1.37 times more volatile than Entergy. It trades about -0.24 of its total potential returns per unit of risk. Entergy is currently generating about 0.05 per unit of volatility. If you would invest 8,139 in Entergy on November 18, 2024 and sell it today you would earn a total of 110.00 from holding Entergy or generate 1.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PGE Corp vs. Entergy
Performance |
| Timeline |
| PGE Corp |
| Entergy |
PGE Corp and Entergy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PGE Corp and Entergy
The main advantage of trading using opposite PGE Corp and Entergy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PGE Corp position performs unexpectedly, Entergy 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 Entergy will offset losses from the drop in Entergy's long position.| PGE Corp vs. Consolidated Edison | PGE Corp vs. Southern Company | PGE Corp vs. Entergy | PGE Corp vs. Pinnacle West Capital |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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