Correlation Between PacifiCorp and Flexible Solutions

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

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

Diversification Opportunities for PacifiCorp and Flexible Solutions

-0.44

Correlation Coefficient

PacifiCorp  Flexible Solutions

Very good diversification

The 3 months correlation between PacifiCorp and Flexible is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding PacifiCorp and Flexible Solutions Internation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flexible Solutions and PacifiCorp 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 PacifiCorp are associated (or correlated) with Flexible Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flexible Solutions has no effect on the direction of PacifiCorp i.e., PacifiCorp and Flexible Solutions go up and down completely randomly.

Pair Corralation between PacifiCorp and Flexible Solutions

Assuming the 90 days horizon PacifiCorp is expected to generate 3.87 times more return on investment than Flexible Solutions. However, PacifiCorp is 3.87 times more volatile than Flexible Solutions International. It trades about 0.3 of its potential returns per unit of risk. Flexible Solutions International is currently generating about -0.07 per unit of risk. If you would invest  12,615  in PacifiCorp on October 11, 2024 and sell it today you would earn a total of  5,385  from holding PacifiCorp or generate 42.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

PacifiCorp  vs.  Flexible Solutions Internation

PacifiCorp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PacifiCorp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent essential indicators, PacifiCorp displayed solid returns over the last few months and may actually be approaching a breakup point.

Flexible Solutions

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Flexible Solutions International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Flexible Solutions may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with PacifiCorp and Flexible Solutions

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

The idea behind PacifiCorp and Flexible Solutions International 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.