Correlation Between Portland General and PNM Resources
Can any of the company-specific risk be diversified away by investing in both Portland General and PNM Resources 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 PNM Resources 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 PNM Resources, you can compare the effects of market volatilities on Portland General and PNM Resources 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 PNM Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Portland General and PNM Resources.
Diversification Opportunities for Portland General and PNM Resources
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Portland and PNM is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Portland General Electric and PNM Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PNM Resources 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 PNM Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PNM Resources has no effect on the direction of Portland General i.e., Portland General and PNM Resources go up and down completely randomly.
Pair Corralation between Portland General and PNM Resources
Considering the 90-day investment horizon Portland General Electric is expected to generate 1.3 times more return on investment than PNM Resources. However, Portland General is 1.3 times more volatile than PNM Resources. It trades about 0.02 of its potential returns per unit of risk. PNM Resources is currently generating about -0.01 per unit of risk. If you would invest 4,435 in Portland General Electric on August 27, 2024 and sell it today you would earn a total of 322.00 from holding Portland General Electric or generate 7.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 92.94% |
| Values | Daily Returns |
Portland General Electric vs. PNM Resources
Performance |
| Timeline |
| Portland General Electric |
| PNM Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Portland General and PNM Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Portland General and PNM Resources
The main advantage of trading using opposite Portland General and PNM Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Portland General position performs unexpectedly, PNM Resources 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 PNM Resources will offset losses from the drop in PNM Resources' long position.| Portland General vs. Dominion Energy | Portland General vs. Consolidated Edison | Portland General vs. Eversource Energy | Portland General vs. FirstEnergy |
| PNM Resources vs. Portland General Electric | PNM Resources vs. MGE Energy | PNM Resources vs. CMS Energy | PNM Resources vs. OGE 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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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