Correlation Between PacifiCorp and Nextera Energy
Can any of the company-specific risk be diversified away by investing in both PacifiCorp and Nextera 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 PacifiCorp and Nextera Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PacifiCorp and Nextera Energy, you can compare the effects of market volatilities on PacifiCorp and Nextera 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 PacifiCorp with a short position of Nextera Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of PacifiCorp and Nextera Energy.
Diversification Opportunities for PacifiCorp and Nextera Energy
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between PacifiCorp and Nextera is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding PacifiCorp and Nextera Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextera Energy and PacifiCorp 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 PacifiCorp are associated (or correlated) with Nextera Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextera Energy has no effect on the direction of PacifiCorp i.e., PacifiCorp and Nextera Energy go up and down completely randomly.
Pair Corralation between PacifiCorp and Nextera Energy
Assuming the 90 days horizon PacifiCorp is expected to generate 3.0 times more return on investment than Nextera Energy. However, PacifiCorp is 3.0 times more volatile than Nextera Energy. It trades about 0.03 of its potential returns per unit of risk. Nextera Energy is currently generating about 0.01 per unit of risk. If you would invest 10,956 in PacifiCorp on September 1, 2024 and sell it today you would earn a total of 521.00 from holding PacifiCorp or generate 4.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PacifiCorp vs. Nextera Energy
Performance |
| Timeline |
| PacifiCorp |
| Nextera Energy |
PacifiCorp and Nextera Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PacifiCorp and Nextera Energy
The main advantage of trading using opposite PacifiCorp and Nextera Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PacifiCorp position performs unexpectedly, Nextera 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 Nextera Energy will offset losses from the drop in Nextera Energy's long position.| PacifiCorp vs. Aurora Innovation | PacifiCorp vs. Empire State Realty | PacifiCorp vs. Scottie Resources Corp | PacifiCorp vs. FactSet Research Systems |
| Nextera Energy vs. Upper Street Marketing | Nextera Energy vs. Barings BDC | Nextera Energy vs. The Gap, | Nextera Energy vs. Western Union Co |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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