Correlation Between Southern and Mfs Utilities
Can any of the company-specific risk be diversified away by investing in both Southern and Mfs Utilities 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 Southern and Mfs Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Company and Mfs Utilities Fund, you can compare the effects of market volatilities on Southern and Mfs Utilities 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 Southern with a short position of Mfs Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern and Mfs Utilities.
Diversification Opportunities for Southern and Mfs Utilities
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Southern and Mfs is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Southern Company and Mfs Utilities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Utilities and Southern 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 Southern Company are associated (or correlated) with Mfs Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Utilities has no effect on the direction of Southern i.e., Southern and Mfs Utilities go up and down completely randomly.
Pair Corralation between Southern and Mfs Utilities
Allowing for the 90-day total investment horizon Southern Company is expected to generate 1.12 times more return on investment than Mfs Utilities. However, Southern is 1.12 times more volatile than Mfs Utilities Fund. It trades about 0.07 of its potential returns per unit of risk. Mfs Utilities Fund is currently generating about 0.02 per unit of risk. If you would invest 6,364 in Southern Company on August 29, 2024 and sell it today you would earn a total of 2,610 from holding Southern Company or generate 41.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Company vs. Mfs Utilities Fund
Performance |
| Timeline |
| Southern |
| Mfs Utilities |
Southern and Mfs Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern and Mfs Utilities
The main advantage of trading using opposite Southern and Mfs Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern position performs unexpectedly, Mfs Utilities 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 Mfs Utilities will offset losses from the drop in Mfs Utilities' long position.| Southern vs. Dominion Energy | Southern vs. American Electric Power | Southern vs. Nextera Energy | Southern vs. Consolidated Edison |
| Mfs Utilities vs. Mesirow Financial Small | Mfs Utilities vs. T Rowe Price | Mfs Utilities vs. Hennessy Large Cap | Mfs Utilities vs. 1919 Financial Services |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |