Correlation Between PGE Corp and Vodka Brands
Can any of the company-specific risk be diversified away by investing in both PGE Corp and Vodka Brands 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 Vodka Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PGE Corp and Vodka Brands Corp, you can compare the effects of market volatilities on PGE Corp and Vodka Brands 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 Vodka Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of PGE Corp and Vodka Brands.
Diversification Opportunities for PGE Corp and Vodka Brands
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between PGE and Vodka is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding PGE Corp and Vodka Brands Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vodka Brands Corp 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 Vodka Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vodka Brands Corp has no effect on the direction of PGE Corp i.e., PGE Corp and Vodka Brands go up and down completely randomly.
Pair Corralation between PGE Corp and Vodka Brands
Considering the 90-day investment horizon PGE Corp is expected to generate 0.23 times more return on investment than Vodka Brands. However, PGE Corp is 4.39 times less risky than Vodka Brands. It trades about 0.21 of its potential returns per unit of risk. Vodka Brands Corp is currently generating about 0.03 per unit of risk. If you would invest 1,977 in PGE Corp on August 30, 2024 and sell it today you would earn a total of 186.00 from holding PGE Corp or generate 9.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.73% |
| Values | Daily Returns |
PGE Corp vs. Vodka Brands Corp
Performance |
| Timeline |
| PGE Corp |
| Vodka Brands Corp |
PGE Corp and Vodka Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PGE Corp and Vodka Brands
The main advantage of trading using opposite PGE Corp and Vodka Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PGE Corp position performs unexpectedly, Vodka Brands 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 Vodka Brands will offset losses from the drop in Vodka Brands' long position.| PGE Corp vs. DTE Energy | PGE Corp vs. Ameren Corp | PGE Corp vs. CenterPoint Energy | PGE Corp vs. Pinnacle West Capital |
| Vodka Brands vs. Aristocrat Group Corp | Vodka Brands vs. Naked Wines plc | Vodka Brands vs. Willamette Valley Vineyards | Vodka Brands vs. Andrew Peller Limited |
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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