Correlation Between Portland General and OGE Energy

Can any of the company-specific risk be diversified away by investing in both Portland General and OGE Energy 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 OGE Energy 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 OGE Energy, you can compare the effects of market volatilities on Portland General and OGE Energy 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 OGE Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Portland General and OGE Energy.

Diversification Opportunities for Portland General and OGE Energy

0.01

Correlation Coefficient

Portland General  OGE Energy

Significant diversification

The 3 months correlation between Portland and OGE is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Portland General Electric and OGE Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OGE Energy 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 OGE Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OGE Energy has no effect on the direction of Portland General i.e., Portland General and OGE Energy go up and down completely randomly.

Pair Corralation between Portland General and OGE Energy

Considering the 90-day investment horizon Portland General is expected to generate 90.6 times less return on investment than OGE Energy. But when comparing it to its historical volatility, Portland General Electric is 1.07 times less risky than OGE Energy. It trades about 0.0 of its potential returns per unit of risk. OGE Energy is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  3,929  in OGE Energy on September 2, 2024 and sell it today you would earn a total of  467.00  from holding OGE Energy or generate 11.89% return on investment over 90 days.

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

Portland General Electric  vs.  OGE Energy

Portland General Electric

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Portland General Electric has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Portland General is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

OGE Energy

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in OGE Energy are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, OGE Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Portland General and OGE Energy

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

The idea behind Portland General Electric and OGE Energy 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.