Correlation Between Atlantica Sustainable and Southern
Can any of the company-specific risk be diversified away by investing in both Atlantica Sustainable and Southern 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 Atlantica Sustainable and Southern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atlantica Sustainable Infrastructure and Southern Company, you can compare the effects of market volatilities on Atlantica Sustainable and Southern 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 Atlantica Sustainable with a short position of Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlantica Sustainable and Southern.
Diversification Opportunities for Atlantica Sustainable and Southern
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Atlantica and Southern is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Atlantica Sustainable Infrastr and Southern Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern and Atlantica Sustainable 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 Atlantica Sustainable Infrastructure are associated (or correlated) with Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern has no effect on the direction of Atlantica Sustainable i.e., Atlantica Sustainable and Southern go up and down completely randomly.
Pair Corralation between Atlantica Sustainable and Southern
Allowing for the 90-day total investment horizon Atlantica Sustainable is expected to generate 1.07 times less return on investment than Southern. In addition to that, Atlantica Sustainable is 1.41 times more volatile than Southern Company. It trades about 0.06 of its total potential returns per unit of risk. Southern Company is currently generating about 0.1 per unit of volatility. If you would invest 6,846 in Southern Company on August 26, 2024 and sell it today you would earn a total of 1,914 from holding Southern Company or generate 27.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Atlantica Sustainable Infrastr vs. Southern Company
Performance |
| Timeline |
| Atlantica Sustainable |
| Southern |
Atlantica Sustainable and Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atlantica Sustainable and Southern
The main advantage of trading using opposite Atlantica Sustainable and Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlantica Sustainable position performs unexpectedly, Southern 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 Southern will offset losses from the drop in Southern's long position.| Atlantica Sustainable vs. Clearway Energy | Atlantica Sustainable vs. Brookfield Renewable Corp | Atlantica Sustainable vs. Nextera Energy Partners | Atlantica Sustainable vs. Brookfield Renewable Partners |
| Southern vs. Dominion Energy | Southern vs. American Electric Power | Southern vs. Nextera Energy | Southern vs. Consolidated Edison |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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