Correlation Between Genie Energy and MGE Energy
Can any of the company-specific risk be diversified away by investing in both Genie Energy and MGE Energy 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 MGE Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genie Energy and MGE Energy, you can compare the effects of market volatilities on Genie Energy and MGE Energy 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 MGE Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genie Energy and MGE Energy.
Diversification Opportunities for Genie Energy and MGE Energy
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Genie and MGE is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Genie Energy and MGE Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGE Energy 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 MGE Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGE Energy has no effect on the direction of Genie Energy i.e., Genie Energy and MGE Energy go up and down completely randomly.
Pair Corralation between Genie Energy and MGE Energy
Considering the 90-day investment horizon Genie Energy is expected to under-perform the MGE Energy. But the stock apears to be less risky and, when comparing its historical volatility, Genie Energy is 1.1 times less risky than MGE Energy. The stock trades about -0.05 of its potential returns per unit of risk. The MGE Energy is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 9,146 in MGE Energy on August 24, 2024 and sell it today you would earn a total of 1,267 from holding MGE Energy or generate 13.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genie Energy vs. MGE Energy
Performance |
| Timeline |
| Genie Energy |
| MGE Energy |
Genie Energy and MGE Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genie Energy and MGE Energy
The main advantage of trading using opposite Genie Energy and MGE Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genie Energy position performs unexpectedly, MGE Energy 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 MGE Energy will offset losses from the drop in MGE Energy'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 |
| MGE Energy vs. CMS Energy | MGE Energy vs. Ameren Corp | MGE Energy vs. Pinnacle West Capital | MGE Energy vs. Evergy, |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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