Correlation Between Portland General and MGE Energy
Can any of the company-specific risk be diversified away by investing in both Portland General and MGE Energy 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 MGE Energy 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 MGE Energy, you can compare the effects of market volatilities on Portland General and MGE Energy 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 MGE Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Portland General and MGE Energy.
Diversification Opportunities for Portland General and MGE Energy
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Portland and MGE is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Portland General Electric and MGE Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGE Energy 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 MGE Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGE Energy has no effect on the direction of Portland General i.e., Portland General and MGE Energy go up and down completely randomly.
Pair Corralation between Portland General and MGE Energy
Considering the 90-day investment horizon Portland General Electric is expected to under-perform the MGE Energy. But the stock apears to be less risky and, when comparing its historical volatility, Portland General Electric is 1.85 times less risky than MGE Energy. The stock trades about -0.04 of its potential returns per unit of risk. The MGE Energy is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 9,169 in MGE Energy on August 27, 2024 and sell it today you would earn a total of 1,245 from holding MGE Energy or generate 13.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Portland General Electric vs. MGE Energy
Performance |
| Timeline |
| Portland General Electric |
| MGE Energy |
Portland General and MGE Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Portland General and MGE Energy
The main advantage of trading using opposite Portland General and MGE Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Portland General position performs unexpectedly, MGE Energy 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 MGE Energy will offset losses from the drop in MGE Energy's long position.| Portland General vs. Dominion Energy | Portland General vs. Consolidated Edison | Portland General vs. Eversource Energy | Portland General vs. FirstEnergy |
| MGE Energy vs. CMS Energy | MGE Energy vs. Ameren Corp | MGE Energy vs. Pinnacle West Capital | MGE Energy vs. Evergy, |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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