Correlation Between PGE Corp and Atlantica Sustainable
Can any of the company-specific risk be diversified away by investing in both PGE Corp and Atlantica Sustainable 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 Atlantica Sustainable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PGE Corp and Atlantica Sustainable Infrastructure, you can compare the effects of market volatilities on PGE Corp and Atlantica Sustainable 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 Atlantica Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of PGE Corp and Atlantica Sustainable.
Diversification Opportunities for PGE Corp and Atlantica Sustainable
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PGE and Atlantica is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding PGE Corp and Atlantica Sustainable Infrastr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlantica Sustainable 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 Atlantica Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlantica Sustainable has no effect on the direction of PGE Corp i.e., PGE Corp and Atlantica Sustainable go up and down completely randomly.
Pair Corralation between PGE Corp and Atlantica Sustainable
Considering the 90-day investment horizon PGE Corp is expected to generate 0.52 times more return on investment than Atlantica Sustainable. However, PGE Corp is 1.92 times less risky than Atlantica Sustainable. It trades about 0.07 of its potential returns per unit of risk. Atlantica Sustainable Infrastructure is currently generating about 0.03 per unit of risk. If you would invest 1,605 in PGE Corp on January 17, 2024 and sell it today you would earn a total of 24.00 from holding PGE Corp or generate 1.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PGE Corp vs. Atlantica Sustainable Infrastr
Performance |
| Timeline |
| PGE Corp |
| Atlantica Sustainable |
PGE Corp and Atlantica Sustainable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PGE Corp and Atlantica Sustainable
The main advantage of trading using opposite PGE Corp and Atlantica Sustainable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PGE Corp position performs unexpectedly, Atlantica Sustainable 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 Atlantica Sustainable will offset losses from the drop in Atlantica Sustainable's long position.| PGE Corp vs. Centrais Eltricas Brasileiras | PGE Corp vs. Central Puerto SA | PGE Corp vs. CMS Energy | PGE Corp vs. Centrais Electricas Brasileiras |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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