Correlation Between Portland General and Consolidated Edison
Can any of the company-specific risk be diversified away by investing in both Portland General and Consolidated Edison 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 Consolidated Edison 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 Consolidated Edison, you can compare the effects of market volatilities on Portland General and Consolidated Edison 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 Consolidated Edison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Portland General and Consolidated Edison.
Diversification Opportunities for Portland General and Consolidated Edison
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Portland and Consolidated is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Portland General Electric and Consolidated Edison in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Edison 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 Consolidated Edison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Edison has no effect on the direction of Portland General i.e., Portland General and Consolidated Edison go up and down completely randomly.
Pair Corralation between Portland General and Consolidated Edison
Considering the 90-day investment horizon Portland General Electric is expected to under-perform the Consolidated Edison. But the stock apears to be less risky and, when comparing its historical volatility, Portland General Electric is 1.01 times less risky than Consolidated Edison. The stock trades about -0.13 of its potential returns per unit of risk. The Consolidated Edison is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 9,914 in Consolidated Edison on November 1, 2024 and sell it today you would lose (528.00) from holding Consolidated Edison or give up 5.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Portland General Electric vs. Consolidated Edison
Performance |
| Timeline |
| Portland General Electric |
| Consolidated Edison |
Portland General and Consolidated Edison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Portland General and Consolidated Edison
The main advantage of trading using opposite Portland General and Consolidated Edison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Portland General position performs unexpectedly, Consolidated Edison 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 Consolidated Edison will offset losses from the drop in Consolidated Edison's long position.| Portland General vs. MGE Energy | Portland General vs. CMS Energy | Portland General vs. OGE Energy | Portland General vs. DTE Energy |
| Consolidated Edison vs. Duke Energy | Consolidated Edison vs. Dominion Energy | Consolidated Edison vs. American Electric Power | Consolidated Edison vs. Nextera 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |