Correlation Between Georgia Power and Argo Group
Can any of the company-specific risk be diversified away by investing in both Georgia Power and Argo Group 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 Georgia Power and Argo Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Georgia Power Co and Argo Group 65, you can compare the effects of market volatilities on Georgia Power and Argo Group 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 Georgia Power with a short position of Argo Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Georgia Power and Argo Group.
Diversification Opportunities for Georgia Power and Argo Group
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Georgia and Argo is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Georgia Power Co and Argo Group 65 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Group 65 and Georgia Power 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 Georgia Power Co are associated (or correlated) with Argo Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Group 65 has no effect on the direction of Georgia Power i.e., Georgia Power and Argo Group go up and down completely randomly.
Pair Corralation between Georgia Power and Argo Group
Given the investment horizon of 90 days Georgia Power Co is expected to under-perform the Argo Group. In addition to that, Georgia Power is 1.02 times more volatile than Argo Group 65. It trades about -0.03 of its total potential returns per unit of risk. Argo Group 65 is currently generating about 0.04 per unit of volatility. If you would invest 2,145 in Argo Group 65 on September 2, 2024 and sell it today you would earn a total of 63.00 from holding Argo Group 65 or generate 2.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Georgia Power Co vs. Argo Group 65
Performance |
| Timeline |
| Georgia Power |
| Argo Group 65 |
Georgia Power and Argo Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Georgia Power and Argo Group
The main advantage of trading using opposite Georgia Power and Argo Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Georgia Power position performs unexpectedly, Argo Group 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 Argo Group will offset losses from the drop in Argo Group's long position.| Georgia Power vs. Southern Co | Georgia Power vs. Entergy Arkansas LLC | Georgia Power vs. DTE Energy Co | Georgia Power vs. Entergy New Orleans |
| Argo Group vs. Brighthouse Financial | Argo Group vs. American Financial Group | Argo Group vs. CMS Energy Corp | Argo Group vs. Aegon Funding |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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