Correlation Between Southern and WR Berkley
Can any of the company-specific risk be diversified away by investing in both Southern and WR Berkley 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 WR Berkley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Co and WR Berkley, you can compare the effects of market volatilities on Southern and WR Berkley 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 WR Berkley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern and WR Berkley.
Diversification Opportunities for Southern and WR Berkley
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Southern and WRB-PF is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Southern Co and WR Berkley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WR Berkley 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 WR Berkley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WR Berkley has no effect on the direction of Southern i.e., Southern and WR Berkley go up and down completely randomly.
Pair Corralation between Southern and WR Berkley
Given the investment horizon of 90 days Southern Co is expected to generate 0.88 times more return on investment than WR Berkley. However, Southern Co is 1.13 times less risky than WR Berkley. It trades about -0.07 of its potential returns per unit of risk. WR Berkley is currently generating about -0.11 per unit of risk. If you would invest 2,259 in Southern Co on October 24, 2024 and sell it today you would lose (97.00) from holding Southern Co or give up 4.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Co vs. WR Berkley
Performance |
| Timeline |
| Southern |
| WR Berkley |
Southern and WR Berkley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern and WR Berkley
The main advantage of trading using opposite Southern and WR Berkley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern position performs unexpectedly, WR Berkley 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 WR Berkley will offset losses from the drop in WR Berkley's long position.| Southern vs. Southern Co | Southern vs. Southern Company Series | Southern vs. ATT Inc | Southern vs. Aegon Funding |
| WR Berkley vs. W R Berkley | WR Berkley vs. Southern Co | WR Berkley vs. Aegon Funding | WR Berkley vs. American Financial Group |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |