Correlation Between Portland General and IDACORP

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

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

Diversification Opportunities for Portland General and IDACORP

0.78

Correlation Coefficient

Portland General  IDACORP

Poor diversification

The 3 months correlation between Portland and IDACORP is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Portland General Electric and IDACORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDACORP and Portland General 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 Portland General Electric are associated (or correlated) with IDACORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDACORP has no effect on the direction of Portland General i.e., Portland General and IDACORP go up and down completely randomly.

Pair Corralation between Portland General and IDACORP

Considering the 90-day investment horizon Portland General is expected to generate 1.65 times less return on investment than IDACORP. In addition to that, Portland General is 1.09 times more volatile than IDACORP. It trades about 0.04 of its total potential returns per unit of risk. IDACORP is currently generating about 0.08 per unit of volatility. If you would invest  10,864  in IDACORP on December 29, 2024 and sell it today you would earn a total of  630.00  from holding IDACORP or generate 5.8% return on investment over 90 days.

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

Portland General Electric  vs.  IDACORP

Portland General Electric

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Portland General Electric are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Portland General is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

IDACORP

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in IDACORP are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, IDACORP may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Portland General and IDACORP

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

The idea behind Portland General Electric and IDACORP 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.