Correlation Between Consumers Energy and UGI
Can any of the company-specific risk be diversified away by investing in both Consumers Energy and UGI 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 Consumers Energy and UGI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consumers Energy and UGI Corporation, you can compare the effects of market volatilities on Consumers Energy and UGI 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 Consumers Energy with a short position of UGI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consumers Energy and UGI.
Diversification Opportunities for Consumers Energy and UGI
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Consumers and UGI is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Consumers Energy and UGI Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UGI Corporation and Consumers Energy 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 Consumers Energy are associated (or correlated) with UGI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UGI Corporation has no effect on the direction of Consumers Energy i.e., Consumers Energy and UGI go up and down completely randomly.
Pair Corralation between Consumers Energy and UGI
Assuming the 90 days trading horizon Consumers Energy is expected to under-perform the UGI. But the preferred stock apears to be less risky and, when comparing its historical volatility, Consumers Energy is 1.92 times less risky than UGI. The preferred stock trades about -0.04 of its potential returns per unit of risk. The UGI Corporation is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,304 in UGI Corporation on November 2, 2024 and sell it today you would earn a total of 795.00 from holding UGI Corporation or generate 34.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consumers Energy vs. UGI Corp.
Performance |
| Timeline |
| Consumers Energy |
| UGI Corporation |
Consumers Energy and UGI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consumers Energy and UGI
The main advantage of trading using opposite Consumers Energy and UGI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consumers Energy position performs unexpectedly, UGI 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 UGI will offset losses from the drop in UGI's long position.| Consumers Energy vs. Nextera Energy | Consumers Energy vs. Duke Energy | Consumers Energy vs. PGE Corp | Consumers Energy vs. Southern Company |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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