Correlation Between Vodka Brands and PGE Corp
Can any of the company-specific risk be diversified away by investing in both Vodka Brands 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 Vodka Brands and PGE Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vodka Brands Corp and PGE Corp, you can compare the effects of market volatilities on Vodka Brands 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 Vodka Brands with a short position of PGE Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vodka Brands and PGE Corp.
Diversification Opportunities for Vodka Brands and PGE Corp
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vodka and PGE is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Vodka Brands Corp and PGE Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGE Corp and Vodka Brands 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 Vodka Brands Corp 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 Vodka Brands i.e., Vodka Brands and PGE Corp go up and down completely randomly.
Pair Corralation between Vodka Brands and PGE Corp
Given the investment horizon of 90 days Vodka Brands is expected to generate 1.59 times less return on investment than PGE Corp. In addition to that, Vodka Brands is 4.39 times more volatile than PGE Corp. It trades about 0.03 of its total potential returns per unit of risk. PGE Corp is currently generating about 0.21 per unit of volatility. If you would invest 1,977 in PGE Corp on August 30, 2024 and sell it today you would earn a total of 186.00 from holding PGE Corp or generate 9.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.73% |
| Values | Daily Returns |
Vodka Brands Corp vs. PGE Corp
Performance |
| Timeline |
| Vodka Brands Corp |
| PGE Corp |
Vodka Brands and PGE Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vodka Brands and PGE Corp
The main advantage of trading using opposite Vodka Brands and PGE Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vodka Brands 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.| Vodka Brands vs. Aristocrat Group Corp | Vodka Brands vs. Naked Wines plc | Vodka Brands vs. Willamette Valley Vineyards | Vodka Brands vs. Andrew Peller Limited |
| PGE Corp vs. DTE Energy | PGE Corp vs. Ameren Corp | PGE Corp vs. CenterPoint Energy | 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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