Correlation Between Portland General and Centrais Elétricas
Can any of the company-specific risk be diversified away by investing in both Portland General and Centrais Elétricas 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 Portland General and Centrais Elétricas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Portland General Electric and Centrais Eltricas Brasileiras, you can compare the effects of market volatilities on Portland General and Centrais Elétricas 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 Portland General with a short position of Centrais Elétricas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Portland General and Centrais Elétricas.
Diversification Opportunities for Portland General and Centrais Elétricas
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Portland and Centrais is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Portland General Electric and Centrais Eltricas Brasileiras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrais Elétricas and Portland General 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 Portland General Electric are associated (or correlated) with Centrais Elétricas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrais Elétricas has no effect on the direction of Portland General i.e., Portland General and Centrais Elétricas go up and down completely randomly.
Pair Corralation between Portland General and Centrais Elétricas
Considering the 90-day investment horizon Portland General Electric is expected to generate 0.73 times more return on investment than Centrais Elétricas. However, Portland General Electric is 1.38 times less risky than Centrais Elétricas. It trades about -0.04 of its potential returns per unit of risk. Centrais Eltricas Brasileiras is currently generating about -0.19 per unit of risk. If you would invest 4,870 in Portland General Electric on August 27, 2024 and sell it today you would lose (63.00) from holding Portland General Electric or give up 1.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Portland General Electric vs. Centrais Eltricas Brasileiras
Performance |
| Timeline |
| Portland General Electric |
| Centrais Elétricas |
Portland General and Centrais Elétricas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Portland General and Centrais Elétricas
The main advantage of trading using opposite Portland General and Centrais Elétricas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Portland General position performs unexpectedly, Centrais Elétricas 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 Centrais Elétricas will offset losses from the drop in Centrais Elétricas' long position.| Portland General vs. Dominion Energy | Portland General vs. Consolidated Edison | Portland General vs. Eversource Energy | Portland General vs. FirstEnergy |
| Centrais Elétricas vs. Nextera Energy | Centrais Elétricas vs. Consumers Energy | Centrais Elétricas vs. Duke Energy | Centrais Elétricas vs. Red Electrica Corporacion |
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 Positions Ratings module to 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.
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