Correlation Between PGE Corp and Pacific Gas
Can any of the company-specific risk be diversified away by investing in both PGE Corp and Pacific Gas 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 Pacific Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PGE Corp and Pacific Gas and, you can compare the effects of market volatilities on PGE Corp and Pacific Gas 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 Pacific Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of PGE Corp and Pacific Gas.
Diversification Opportunities for PGE Corp and Pacific Gas
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between PGE and Pacific is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding PGE Corp and Pacific Gas and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Gas 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 Pacific Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Gas has no effect on the direction of PGE Corp i.e., PGE Corp and Pacific Gas go up and down completely randomly.
Pair Corralation between PGE Corp and Pacific Gas
Considering the 90-day investment horizon PGE Corp is expected to generate 1.04 times more return on investment than Pacific Gas. However, PGE Corp is 1.04 times more volatile than Pacific Gas and. It trades about 0.15 of its potential returns per unit of risk. Pacific Gas and is currently generating about 0.0 per unit of risk. If you would invest 1,995 in PGE Corp on September 5, 2024 and sell it today you would earn a total of 90.00 from holding PGE Corp or generate 4.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PGE Corp vs. Pacific Gas and
Performance |
| Timeline |
| PGE Corp |
| Pacific Gas |
PGE Corp and Pacific Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PGE Corp and Pacific Gas
The main advantage of trading using opposite PGE Corp and Pacific Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PGE Corp position performs unexpectedly, Pacific Gas 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 Pacific Gas will offset losses from the drop in Pacific Gas' long position.| PGE Corp vs. Consolidated Edison | PGE Corp vs. Southern Company | PGE Corp vs. Entergy | PGE Corp vs. Pinnacle West Capital |
| Pacific Gas vs. Nextera Energy | Pacific Gas vs. Duke Energy | Pacific Gas vs. PGE Corp | Pacific Gas vs. Southern Company |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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