Correlation Between PGE Corp and KeyCorp
Can any of the company-specific risk be diversified away by investing in both PGE Corp and KeyCorp 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 KeyCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PGE Corp and KeyCorp, you can compare the effects of market volatilities on PGE Corp and KeyCorp 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 KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of PGE Corp and KeyCorp.
Diversification Opportunities for PGE Corp and KeyCorp
Good diversification
The 3 months correlation between PGE and KeyCorp is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding PGE Corp and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp 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 KeyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KeyCorp has no effect on the direction of PGE Corp i.e., PGE Corp and KeyCorp go up and down completely randomly.
Pair Corralation between PGE Corp and KeyCorp
Considering the 90-day investment horizon PGE Corp is expected to generate 1.27 times less return on investment than KeyCorp. In addition to that, PGE Corp is 1.06 times more volatile than KeyCorp. It trades about 0.06 of its total potential returns per unit of risk. KeyCorp is currently generating about 0.09 per unit of volatility. If you would invest 1,971 in KeyCorp on September 4, 2024 and sell it today you would earn a total of 490.00 from holding KeyCorp or generate 24.86% 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. KeyCorp
Performance |
| Timeline |
| PGE Corp |
| KeyCorp |
PGE Corp and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PGE Corp and KeyCorp
The main advantage of trading using opposite PGE Corp and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PGE Corp position performs unexpectedly, KeyCorp 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 KeyCorp will offset losses from the drop in KeyCorp'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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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