Correlation Between PGE Corp and Rumble
Can any of the company-specific risk be diversified away by investing in both PGE Corp and Rumble 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 Rumble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PGE Corp and Rumble Inc, you can compare the effects of market volatilities on PGE Corp and Rumble 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 Rumble. Check out your portfolio center. Please also check ongoing floating volatility patterns of PGE Corp and Rumble.
Diversification Opportunities for PGE Corp and Rumble
Poor diversification
The 3 months correlation between PGE and Rumble is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding PGE Corp and Rumble Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rumble Inc 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 Rumble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rumble Inc has no effect on the direction of PGE Corp i.e., PGE Corp and Rumble go up and down completely randomly.
Pair Corralation between PGE Corp and Rumble
Considering the 90-day investment horizon PGE Corp is expected to generate 1.47 times less return on investment than Rumble. But when comparing it to its historical volatility, PGE Corp is 4.15 times less risky than Rumble. It trades about 0.13 of its potential returns per unit of risk. Rumble Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 615.00 in Rumble Inc on September 3, 2024 and sell it today you would earn a total of 95.00 from holding Rumble Inc or generate 15.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PGE Corp vs. Rumble Inc
Performance |
| Timeline |
| PGE Corp |
| Rumble Inc |
PGE Corp and Rumble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PGE Corp and Rumble
The main advantage of trading using opposite PGE Corp and Rumble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PGE Corp position performs unexpectedly, Rumble 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 Rumble will offset losses from the drop in Rumble'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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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