Correlation Between Southern and US Global
Can any of the company-specific risk be diversified away by investing in both Southern and US Global 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 US Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Co and US Global Investors, you can compare the effects of market volatilities on Southern and US Global 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 US Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern and US Global.
Diversification Opportunities for Southern and US Global
Poor diversification
The 3 months correlation between Southern and GROW is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Southern Co and US Global Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Global Investors 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 Co are associated (or correlated) with US Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Global Investors has no effect on the direction of Southern i.e., Southern and US Global go up and down completely randomly.
Pair Corralation between Southern and US Global
Given the investment horizon of 90 days Southern Co is expected to generate 0.44 times more return on investment than US Global. However, Southern Co is 2.26 times less risky than US Global. It trades about 0.03 of its potential returns per unit of risk. US Global Investors is currently generating about -0.02 per unit of risk. If you would invest 2,267 in Southern Co on September 12, 2024 and sell it today you would earn a total of 37.00 from holding Southern Co or generate 1.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Southern Co vs. US Global Investors
Performance |
| Timeline |
| Southern |
| US Global Investors |
Southern and US Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern and US Global
The main advantage of trading using opposite Southern and US Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern position performs unexpectedly, US Global 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 US Global will offset losses from the drop in US Global's long position.| Southern vs. Old Republic International | Southern vs. Cincinnati Financial | Southern vs. QBE Insurance Group | Southern vs. Sphere Entertainment Co |
| US Global vs. Gladstone Investment | US Global vs. PennantPark Floating Rate | US Global vs. Horizon Technology Finance | US Global vs. Stellus Capital Investment |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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