Correlation Between Genie Energy and IDACORP
Can any of the company-specific risk be diversified away by investing in both Genie Energy and IDACORP 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 IDACORP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genie Energy and IDACORP, you can compare the effects of market volatilities on Genie Energy and IDACORP 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 IDACORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genie Energy and IDACORP.
Diversification Opportunities for Genie Energy and IDACORP
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Genie and IDACORP is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Genie Energy and IDACORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDACORP 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 IDACORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDACORP has no effect on the direction of Genie Energy i.e., Genie Energy and IDACORP go up and down completely randomly.
Pair Corralation between Genie Energy and IDACORP
Considering the 90-day investment horizon Genie Energy is expected to under-perform the IDACORP. But the stock apears to be less risky and, when comparing its historical volatility, Genie Energy is 1.22 times less risky than IDACORP. The stock trades about -0.36 of its potential returns per unit of risk. The IDACORP is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 11,009 in IDACORP on October 26, 2024 and sell it today you would lose (130.00) from holding IDACORP or give up 1.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genie Energy vs. IDACORP
Performance |
| Timeline |
| Genie Energy |
| IDACORP |
Genie Energy and IDACORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genie Energy and IDACORP
The main advantage of trading using opposite Genie Energy and IDACORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genie Energy position performs unexpectedly, IDACORP 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 IDACORP will offset losses from the drop in IDACORP'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 |
| IDACORP vs. CMS Energy | IDACORP vs. Pinnacle West Capital | IDACORP vs. Alliant Energy Corp | IDACORP vs. Portland General Electric |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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