Correlation Between Public Service and PPL
Can any of the company-specific risk be diversified away by investing in both Public Service and PPL 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 Public Service and PPL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Public Service Enterprise and PPL Corporation, you can compare the effects of market volatilities on Public Service and PPL 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 Public Service with a short position of PPL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Service and PPL.
Diversification Opportunities for Public Service and PPL
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Public and PPL is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Public Service Enterprise and PPL Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPL Corporation and Public Service 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 Public Service Enterprise are associated (or correlated) with PPL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPL Corporation has no effect on the direction of Public Service i.e., Public Service and PPL go up and down completely randomly.
Pair Corralation between Public Service and PPL
Considering the 90-day investment horizon Public Service is expected to generate 1.12 times less return on investment than PPL. But when comparing it to its historical volatility, Public Service Enterprise is 1.33 times less risky than PPL. It trades about 0.15 of its potential returns per unit of risk. PPL Corporation is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,660 in PPL Corporation on January 26, 2024 and sell it today you would earn a total of 77.00 from holding PPL Corporation or generate 2.89% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Public Service Enterprise vs. PPL Corp.
Performance |
Timeline |
Public Service Enterprise |
PPL Corporation |
Public Service and PPL Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Public Service and PPL
The main advantage of trading using opposite Public Service and PPL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Service position performs unexpectedly, PPL 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 PPL will offset losses from the drop in PPL's long position.Public Service vs. CenterPoint Energy | Public Service vs. FirstEnergy | Public Service vs. Pinnacle West Capital | Public Service vs. Edison International |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
Global Correlations Find global opportunities by holding instruments from different markets | |
ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
Share Portfolio Track or share privately all of your investments from the convenience of any device |