Correlation Between PacifiCorp and Engie SA
Can any of the company-specific risk be diversified away by investing in both PacifiCorp and Engie SA 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 Engie SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PacifiCorp and Engie SA, you can compare the effects of market volatilities on PacifiCorp and Engie SA 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 Engie SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of PacifiCorp and Engie SA.
Diversification Opportunities for PacifiCorp and Engie SA
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PacifiCorp and Engie is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding PacifiCorp and Engie SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engie SA 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 Engie SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engie SA has no effect on the direction of PacifiCorp i.e., PacifiCorp and Engie SA go up and down completely randomly.
Pair Corralation between PacifiCorp and Engie SA
Assuming the 90 days horizon PacifiCorp is expected to generate 4.21 times less return on investment than Engie SA. But when comparing it to its historical volatility, PacifiCorp is 2.61 times less risky than Engie SA. It trades about 0.13 of its potential returns per unit of risk. Engie SA is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,526 in Engie SA on October 21, 2024 and sell it today you would earn a total of 105.00 from holding Engie SA or generate 6.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PacifiCorp vs. Engie SA
Performance |
| Timeline |
| PacifiCorp |
| Engie SA |
PacifiCorp and Engie SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PacifiCorp and Engie SA
The main advantage of trading using opposite PacifiCorp and Engie SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PacifiCorp position performs unexpectedly, Engie SA 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 Engie SA will offset losses from the drop in Engie SA's long position.| PacifiCorp vs. Iberdrola SA | PacifiCorp vs. Iberdrola SA | PacifiCorp vs. Enel SpA | PacifiCorp vs. ENEL Societa per |
| Engie SA vs. Iberdrola SA | Engie SA vs. Iberdrola SA | Engie SA vs. Enel SpA | Engie SA vs. ENEL Societa per |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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