Correlation Between Public Service and Union Electric
Can any of the company-specific risk be diversified away by investing in both Public Service and Union Electric 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 Public Service and Union Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Public Service Enterprise and Union Electric, you can compare the effects of market volatilities on Public Service and Union Electric 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 Public Service with a short position of Union Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Service and Union Electric.
Diversification Opportunities for Public Service and Union Electric
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Public and Union is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Public Service Enterprise and Union Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Electric and Public Service 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 Public Service Enterprise are associated (or correlated) with Union Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Electric has no effect on the direction of Public Service i.e., Public Service and Union Electric go up and down completely randomly.
Pair Corralation between Public Service and Union Electric
If you would invest 8,038 in Public Service Enterprise on September 4, 2024 and sell it today you would earn a total of 1,189 from holding Public Service Enterprise or generate 14.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 1.56% |
| Values | Daily Returns |
Public Service Enterprise vs. Union Electric
Performance |
| Timeline |
| Public Service Enterprise |
| Union Electric |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Public Service and Union Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Public Service and Union Electric
The main advantage of trading using opposite Public Service and Union Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Service position performs unexpectedly, Union Electric 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 Union Electric will offset losses from the drop in Union Electric's long position.| Public Service vs. CenterPoint Energy | Public Service vs. FirstEnergy | Public Service vs. Pinnacle West Capital | Public Service vs. Edison International |
| Union Electric vs. IDACORP | Union Electric vs. Pinnacle West Capital | Union Electric vs. Portland General Electric | Union Electric vs. CMS Energy |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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