Correlation Between Pure Cycle and PGE Corp
Can any of the company-specific risk be diversified away by investing in both Pure Cycle and PGE Corp 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 Pure Cycle and PGE Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pure Cycle and PGE Corp, you can compare the effects of market volatilities on Pure Cycle and PGE Corp 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 Pure Cycle with a short position of PGE Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pure Cycle and PGE Corp.
Diversification Opportunities for Pure Cycle and PGE Corp
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pure and PGE is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Pure Cycle and PGE Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGE Corp and Pure Cycle 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 Pure Cycle are associated (or correlated) with PGE Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGE Corp has no effect on the direction of Pure Cycle i.e., Pure Cycle and PGE Corp go up and down completely randomly.
Pair Corralation between Pure Cycle and PGE Corp
Given the investment horizon of 90 days Pure Cycle is expected to generate 2.27 times more return on investment than PGE Corp. However, Pure Cycle is 2.27 times more volatile than PGE Corp. It trades about 0.24 of its potential returns per unit of risk. PGE Corp is currently generating about 0.13 per unit of risk. If you would invest 1,025 in Pure Cycle on September 2, 2024 and sell it today you would earn a total of 429.00 from holding Pure Cycle or generate 41.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pure Cycle vs. PGE Corp
Performance |
| Timeline |
| Pure Cycle |
| PGE Corp |
Pure Cycle and PGE Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pure Cycle and PGE Corp
The main advantage of trading using opposite Pure Cycle and PGE Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pure Cycle position performs unexpectedly, PGE Corp 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 PGE Corp will offset losses from the drop in PGE Corp's long position.| Pure Cycle vs. Cadiz Inc | Pure Cycle vs. Artesian Resources | Pure Cycle vs. Global Water Resources | Pure Cycle vs. Parke Bancorp |
| 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |