Correlation Between Edison International and PGE
Can any of the company-specific risk be diversified away by investing in both Edison International and PGE 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 Edison International and PGE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edison International and PGE Corporation, you can compare the effects of market volatilities on Edison International and PGE 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 Edison International with a short position of PGE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edison International and PGE.
Diversification Opportunities for Edison International and PGE
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Edison and PGE is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Edison International and PGE Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGE Corporation and Edison International 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 Edison International are associated (or correlated) with PGE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGE Corporation has no effect on the direction of Edison International i.e., Edison International and PGE go up and down completely randomly.
Pair Corralation between Edison International and PGE
Assuming the 90 days horizon Edison International is expected to under-perform the PGE. In addition to that, Edison International is 1.12 times more volatile than PGE Corporation. It trades about -0.01 of its total potential returns per unit of risk. PGE Corporation is currently generating about 0.01 per unit of volatility. If you would invest 1,479 in PGE Corporation on December 4, 2024 and sell it today you would earn a total of 44.00 from holding PGE Corporation or generate 2.97% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Edison International vs. PGE Corp.
Performance |
Timeline |
Edison International |
PGE Corporation |
Edison International and PGE Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Edison International and PGE
The main advantage of trading using opposite Edison International and PGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edison International position performs unexpectedly, PGE 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 will offset losses from the drop in PGE's long position.Edison International vs. UNITED UTILITIES GP | Edison International vs. UNIVMUSIC GRPADR050 | Edison International vs. Chesapeake Utilities | Edison International vs. Playa Hotels Resorts |
PGE vs. Hitachi Construction Machinery | PGE vs. Warner Music Group | PGE vs. MOVIE GAMES SA | PGE vs. ePlay Digital |
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 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.
Other Complementary Tools
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |