Correlation Between Southern and Gabelli Utility
Can any of the company-specific risk be diversified away by investing in both Southern and Gabelli Utility 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 Gabelli Utility into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Co and Gabelli Utility Closed, you can compare the effects of market volatilities on Southern and Gabelli Utility 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 Gabelli Utility. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern and Gabelli Utility.
Diversification Opportunities for Southern and Gabelli Utility
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Southern and Gabelli is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Southern Co and Gabelli Utility Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Utility Closed 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 Gabelli Utility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Utility Closed has no effect on the direction of Southern i.e., Southern and Gabelli Utility go up and down completely randomly.
Pair Corralation between Southern and Gabelli Utility
Given the investment horizon of 90 days Southern is expected to generate 2.35 times less return on investment than Gabelli Utility. In addition to that, Southern is 1.09 times more volatile than Gabelli Utility Closed. It trades about 0.07 of its total potential returns per unit of risk. Gabelli Utility Closed is currently generating about 0.18 per unit of volatility. If you would invest 531.00 in Gabelli Utility Closed on November 9, 2024 and sell it today you would earn a total of 18.00 from holding Gabelli Utility Closed or generate 3.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Co vs. Gabelli Utility Closed
Performance |
| Timeline |
| Southern |
| Gabelli Utility Closed |
Southern and Gabelli Utility Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern and Gabelli Utility
The main advantage of trading using opposite Southern and Gabelli Utility positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern position performs unexpectedly, Gabelli Utility 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 Gabelli Utility will offset losses from the drop in Gabelli Utility's long position.| Southern vs. Southern Co | Southern vs. Southern Company Series | Southern vs. ATT Inc | Southern vs. Aegon Funding |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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