Correlation Between Old Republic and Southern
Can any of the company-specific risk be diversified away by investing in both Old Republic and Southern 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 Old Republic and Southern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Republic International and Southern Co, you can compare the effects of market volatilities on Old Republic and Southern 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 Old Republic with a short position of Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Republic and Southern.
Diversification Opportunities for Old Republic and Southern
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Old and Southern is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Old Republic International and Southern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern and Old Republic 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 Old Republic International are associated (or correlated) with Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern has no effect on the direction of Old Republic i.e., Old Republic and Southern go up and down completely randomly.
Pair Corralation between Old Republic and Southern
Considering the 90-day investment horizon Old Republic International is expected to generate 1.44 times more return on investment than Southern. However, Old Republic is 1.44 times more volatile than Southern Co. It trades about 0.09 of its potential returns per unit of risk. Southern Co is currently generating about 0.01 per unit of risk. If you would invest 2,527 in Old Republic International on September 12, 2024 and sell it today you would earn a total of 1,071 from holding Old Republic International or generate 42.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Republic International vs. Southern Co
Performance |
| Timeline |
| Old Republic Interna |
| Southern |
Old Republic and Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Republic and Southern
The main advantage of trading using opposite Old Republic and Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Republic position performs unexpectedly, Southern 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 Southern will offset losses from the drop in Southern's long position.| Old Republic vs. Axa Equitable Holdings | Old Republic vs. American International Group | Old Republic vs. Arch Capital Group | Old Republic vs. Sun Life Financial |
| Southern vs. Old Republic International | Southern vs. Cincinnati Financial | Southern vs. QBE Insurance Group | Southern vs. Sphere Entertainment Co |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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