Correlation Between Genie Energy and Avangrid
Can any of the company-specific risk be diversified away by investing in both Genie Energy and Avangrid 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 Genie Energy and Avangrid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genie Energy and Avangrid, you can compare the effects of market volatilities on Genie Energy and Avangrid 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 Genie Energy with a short position of Avangrid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genie Energy and Avangrid.
Diversification Opportunities for Genie Energy and Avangrid
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Genie and Avangrid is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Genie Energy and Avangrid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avangrid and Genie 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 Genie Energy are associated (or correlated) with Avangrid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avangrid has no effect on the direction of Genie Energy i.e., Genie Energy and Avangrid go up and down completely randomly.
Pair Corralation between Genie Energy and Avangrid
Considering the 90-day investment horizon Genie Energy is expected to under-perform the Avangrid. In addition to that, Genie Energy is 8.66 times more volatile than Avangrid. It trades about -0.12 of its total potential returns per unit of risk. Avangrid is currently generating about 0.07 per unit of volatility. If you would invest 3,530 in Avangrid on September 12, 2024 and sell it today you would earn a total of 32.00 from holding Avangrid or generate 0.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genie Energy vs. Avangrid
Performance |
| Timeline |
| Genie Energy |
| Avangrid |
Genie Energy and Avangrid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genie Energy and Avangrid
The main advantage of trading using opposite Genie Energy and Avangrid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genie Energy position performs unexpectedly, Avangrid 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 Avangrid will offset losses from the drop in Avangrid's long position.| Genie Energy vs. Centrais Electricas Brasileiras | Genie Energy vs. Central Puerto SA | Genie Energy vs. Korea Electric Power | Genie Energy vs. Empresa Distribuidora y |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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