Correlation Between AMREP and PacifiCorp

Can any of the company-specific risk be diversified away by investing in both AMREP and PacifiCorp 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 AMREP and PacifiCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AMREP and PacifiCorp, you can compare the effects of market volatilities on AMREP and PacifiCorp 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 AMREP with a short position of PacifiCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMREP and PacifiCorp.

Diversification Opportunities for AMREP and PacifiCorp

0.48

Correlation Coefficient

AMREP  PacifiCorp

Very weak diversification

The 3 months correlation between AMREP and PacifiCorp is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding AMREP and PacifiCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PacifiCorp and AMREP 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 AMREP are associated (or correlated) with PacifiCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PacifiCorp has no effect on the direction of AMREP i.e., AMREP and PacifiCorp go up and down completely randomly.

Pair Corralation between AMREP and PacifiCorp

Considering the 90-day investment horizon AMREP is expected to under-perform the PacifiCorp. But the stock apears to be less risky and, when comparing its historical volatility, AMREP is 111.32 times less risky than PacifiCorp. The stock trades about -0.35 of its potential returns per unit of risk. The PacifiCorp is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  19,325  in PacifiCorp on December 4, 2024 and sell it today you would earn a total of  0.00  from holding PacifiCorp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	28.57%
Values	Daily Returns

AMREP  vs.  PacifiCorp

AMREP

Risk-Adjusted Performance

Very Weak

Over the last 90 days AMREP has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

PacifiCorp

Risk-Adjusted Performance

OK

Over the last 90 days PacifiCorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unfluctuating essential indicators, PacifiCorp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AMREP and PacifiCorp

The main advantage of trading using opposite AMREP and PacifiCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMREP position performs unexpectedly, PacifiCorp 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 PacifiCorp will offset losses from the drop in PacifiCorp's long position.

The idea behind AMREP and PacifiCorp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.