Correlation Between Prospera Energy and Southern Energy
Can any of the company-specific risk be diversified away by investing in both Prospera Energy and Southern 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 Prospera Energy and Southern Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prospera Energy and Southern Energy Corp, you can compare the effects of market volatilities on Prospera Energy and Southern 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 Prospera Energy with a short position of Southern Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prospera Energy and Southern Energy.
Diversification Opportunities for Prospera Energy and Southern Energy
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Prospera and Southern is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Prospera Energy and Southern Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Energy Corp and Prospera 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 Prospera Energy are associated (or correlated) with Southern Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Energy Corp has no effect on the direction of Prospera Energy i.e., Prospera Energy and Southern Energy go up and down completely randomly.
Pair Corralation between Prospera Energy and Southern Energy
Assuming the 90 days horizon Prospera Energy is expected to generate 1.87 times more return on investment than Southern Energy. However, Prospera Energy is 1.87 times more volatile than Southern Energy Corp. It trades about -0.09 of its potential returns per unit of risk. Southern Energy Corp is currently generating about -0.21 per unit of risk. If you would invest 5.00 in Prospera Energy on November 28, 2024 and sell it today you would lose (1.50) from holding Prospera Energy or give up 30.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prospera Energy vs. Southern Energy Corp
Performance |
| Timeline |
| Prospera Energy |
| Southern Energy Corp |
Prospera Energy and Southern Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prospera Energy and Southern Energy
The main advantage of trading using opposite Prospera Energy and Southern Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prospera Energy position performs unexpectedly, Southern 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 Southern Energy will offset losses from the drop in Southern Energy's long position.| Prospera Energy vs. Prairie Provident Resources | Prospera Energy vs. WesCan Energy Corp | Prospera Energy vs. ROK Resources |
| Southern Energy vs. Prospera Energy | Southern Energy vs. Pine Cliff Energy | Southern Energy vs. Lucero Energy Corp | Southern Energy vs. iShares Canadian HYBrid |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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