Correlation Between PGE Corp and PacifiCorp

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

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

Diversification Opportunities for PGE Corp and PacifiCorp

-0.09

Correlation Coefficient

PGE Corp  PacifiCorp

Good diversification

The 3 months correlation between PGE and PacifiCorp is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding PGE Corp and PacifiCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PacifiCorp and PGE Corp 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 PGE Corp 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 PGE Corp i.e., PGE Corp and PacifiCorp go up and down completely randomly.

Pair Corralation between PGE Corp and PacifiCorp

Considering the 90-day investment horizon PGE Corp is expected to generate 0.06 times more return on investment than PacifiCorp. However, PGE Corp is 16.77 times less risky than PacifiCorp. It trades about -0.11 of its potential returns per unit of risk. PacifiCorp is currently generating about -0.17 per unit of risk. If you would invest  2,011  in PGE Corp on December 29, 2024 and sell it today you would lose (311.00) from holding PGE Corp or give up 15.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	18.03%
Values	Daily Returns

PGE Corp  vs.  PacifiCorp

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.

PacifiCorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days PacifiCorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with PGE Corp and PacifiCorp

The main advantage of trading using opposite PGE Corp and PacifiCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PGE Corp 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 PGE Corp 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.