Correlation Between Cheniere Energy and PGE Corp

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

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

Diversification Opportunities for Cheniere Energy and PGE Corp

-0.82

Correlation Coefficient

Cheniere Energy  PGE Corp

Pay attention - limited upside

The 3 months correlation between Cheniere and PGE is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Cheniere Energy Partners and PGE Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGE Corp and Cheniere Energy 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 Cheniere Energy Partners 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 Cheniere Energy i.e., Cheniere Energy and PGE Corp go up and down completely randomly.

Pair Corralation between Cheniere Energy and PGE Corp

Considering the 90-day investment horizon Cheniere Energy Partners is expected to generate 1.02 times more return on investment than PGE Corp. However, Cheniere Energy is 1.02 times more volatile than PGE Corp. It trades about 0.14 of its potential returns per unit of risk. PGE Corp is currently generating about -0.1 per unit of risk. If you would invest  5,278  in Cheniere Energy Partners on December 27, 2024 and sell it today you would earn a total of  1,091  from holding Cheniere Energy Partners or generate 20.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Cheniere Energy Partners  vs.  PGE Corp

Cheniere Energy Partners

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cheniere Energy Partners are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Cheniere Energy reported solid returns over the last few months and may actually be approaching a breakup point.

PGE Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days PGE Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Cheniere Energy and PGE Corp

The main advantage of trading using opposite Cheniere Energy and PGE Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheniere Energy 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.

The idea behind Cheniere Energy Partners and PGE Corp 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.

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 Commodity Directory module to find actively traded commodities issued by global exchanges.