Correlation Between Avista and OGE Energy

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

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

Diversification Opportunities for Avista and OGE Energy

0.83

Correlation Coefficient

Avista  OGE Energy

Very poor diversification

The 3 months correlation between Avista and OGE is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Avista and OGE Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OGE Energy and Avista 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 Avista 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 Avista i.e., Avista and OGE Energy go up and down completely randomly.

Pair Corralation between Avista and OGE Energy

Considering the 90-day investment horizon Avista is expected to generate 1.25 times more return on investment than OGE Energy. However, Avista is 1.25 times more volatile than OGE Energy. It trades about 0.08 of its potential returns per unit of risk. OGE Energy is currently generating about 0.02 per unit of risk. If you would invest  3,680  in Avista on July 31, 2025 and sell it today you would earn a total of  205.00  from holding Avista or generate 5.57% return on investment over 90 days.

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

Avista  vs.  OGE Energy

Avista

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Avista are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Avista is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

OGE Energy

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in OGE Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, OGE Energy is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Avista and OGE Energy

The main advantage of trading using opposite Avista and OGE Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avista 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 Avista 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.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.