Correlation Between PGE Corp and United Parks
Can any of the company-specific risk be diversified away by investing in both PGE Corp and United Parks 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 United Parks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PGE Corp and United Parks Resorts, you can compare the effects of market volatilities on PGE Corp and United Parks 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 United Parks. Check out your portfolio center. Please also check ongoing floating volatility patterns of PGE Corp and United Parks.
Diversification Opportunities for PGE Corp and United Parks
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PGE and United is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding PGE Corp and United Parks Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parks Resorts 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 United Parks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parks Resorts has no effect on the direction of PGE Corp i.e., PGE Corp and United Parks go up and down completely randomly.
Pair Corralation between PGE Corp and United Parks
Considering the 90-day investment horizon PGE Corp is expected to generate 0.55 times more return on investment than United Parks. However, PGE Corp is 1.8 times less risky than United Parks. It trades about 0.06 of its potential returns per unit of risk. United Parks Resorts is currently generating about 0.02 per unit of risk. If you would invest 1,597 in PGE Corp on September 3, 2024 and sell it today you would earn a total of 566.00 from holding PGE Corp or generate 35.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PGE Corp vs. United Parks Resorts
Performance |
| Timeline |
| PGE Corp |
| United Parks Resorts |
PGE Corp and United Parks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PGE Corp and United Parks
The main advantage of trading using opposite PGE Corp and United Parks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PGE Corp position performs unexpectedly, United Parks 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 United Parks will offset losses from the drop in United Parks' long position.| PGE Corp vs. Consolidated Edison | PGE Corp vs. Southern Company | PGE Corp vs. Entergy | PGE Corp vs. Pinnacle West Capital |
| United Parks vs. Transportadora de Gas | United Parks vs. NiSource | United Parks vs. PGE Corp | United Parks vs. Integral Ad Science |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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