Correlation Between Reservoir Media and PGE Corp
Can any of the company-specific risk be diversified away by investing in both Reservoir Media and PGE Corp 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 Reservoir Media and PGE Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reservoir Media and PGE Corp, you can compare the effects of market volatilities on Reservoir Media and PGE Corp 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 Reservoir Media with a short position of PGE Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reservoir Media and PGE Corp.
Diversification Opportunities for Reservoir Media and PGE Corp
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Reservoir and PGE is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Reservoir Media and PGE Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGE Corp and Reservoir Media 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 Reservoir Media are associated (or correlated) with PGE Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGE Corp has no effect on the direction of Reservoir Media i.e., Reservoir Media and PGE Corp go up and down completely randomly.
Pair Corralation between Reservoir Media and PGE Corp
Given the investment horizon of 90 days Reservoir Media is expected to generate 2.35 times more return on investment than PGE Corp. However, Reservoir Media is 2.35 times more volatile than PGE Corp. It trades about 0.3 of its potential returns per unit of risk. PGE Corp is currently generating about 0.38 per unit of risk. If you would invest 833.00 in Reservoir Media on September 1, 2024 and sell it today you would earn a total of 111.00 from holding Reservoir Media or generate 13.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reservoir Media vs. PGE Corp
Performance |
| Timeline |
| Reservoir Media |
| PGE Corp |
Reservoir Media and PGE Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reservoir Media and PGE Corp
The main advantage of trading using opposite Reservoir Media and PGE Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reservoir Media position performs unexpectedly, PGE Corp 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 PGE Corp will offset losses from the drop in PGE Corp's long position.| Reservoir Media vs. ADTRAN Inc | Reservoir Media vs. Belden Inc | Reservoir Media vs. ADC Therapeutics SA | Reservoir Media vs. Comtech Telecommunications Corp |
| PGE Corp vs. Consolidated Edison | PGE Corp vs. Southern Company | PGE Corp vs. Entergy | PGE Corp vs. Pinnacle West Capital |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |