Correlation Between Cadiz Depositary and Southern Company
Can any of the company-specific risk be diversified away by investing in both Cadiz Depositary and Southern Company 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 Cadiz Depositary and Southern Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cadiz Depositary Shares and Southern Company Series, you can compare the effects of market volatilities on Cadiz Depositary and Southern Company 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 Cadiz Depositary with a short position of Southern Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadiz Depositary and Southern Company.
Diversification Opportunities for Cadiz Depositary and Southern Company
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cadiz and Southern is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Cadiz Depositary Shares and Southern Company Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Company and Cadiz Depositary 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 Cadiz Depositary Shares are associated (or correlated) with Southern Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Company has no effect on the direction of Cadiz Depositary i.e., Cadiz Depositary and Southern Company go up and down completely randomly.
Pair Corralation between Cadiz Depositary and Southern Company
Assuming the 90 days horizon Cadiz Depositary Shares is expected to generate 1.12 times more return on investment than Southern Company. However, Cadiz Depositary is 1.12 times more volatile than Southern Company Series. It trades about 0.31 of its potential returns per unit of risk. Southern Company Series is currently generating about -0.21 per unit of risk. If you would invest 1,528 in Cadiz Depositary Shares on August 28, 2024 and sell it today you would earn a total of 108.00 from holding Cadiz Depositary Shares or generate 7.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cadiz Depositary Shares vs. Southern Company Series
Performance |
| Timeline |
| Cadiz Depositary Shares |
| Southern Company |
Cadiz Depositary and Southern Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cadiz Depositary and Southern Company
The main advantage of trading using opposite Cadiz Depositary and Southern Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadiz Depositary position performs unexpectedly, Southern Company 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 Company will offset losses from the drop in Southern Company's long position.| Cadiz Depositary vs. Atlanticus Holdings Corp | Cadiz Depositary vs. LifeMD Preferred Series | Cadiz Depositary vs. Aquagold International | Cadiz Depositary vs. Morningstar Unconstrained Allocation |
| Southern Company vs. Southern Co | Southern Company vs. DTE Energy | Southern Company vs. Southern Co | Southern Company vs. Prudential Financial 4125 |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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