Correlation Between Southern Company and Collective Mining
Can any of the company-specific risk be diversified away by investing in both Southern Company and Collective Mining 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 Company and Collective Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Company Series and Collective Mining, you can compare the effects of market volatilities on Southern Company and Collective Mining 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 Company with a short position of Collective Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Company and Collective Mining.
Diversification Opportunities for Southern Company and Collective Mining
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Southern and Collective is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Southern Company Series and Collective Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collective Mining and Southern Company 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 Series are associated (or correlated) with Collective Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collective Mining has no effect on the direction of Southern Company i.e., Southern Company and Collective Mining go up and down completely randomly.
Pair Corralation between Southern Company and Collective Mining
Given the investment horizon of 90 days Southern Company is expected to generate 3055.0 times less return on investment than Collective Mining. But when comparing it to its historical volatility, Southern Company Series is 4.2 times less risky than Collective Mining. It trades about 0.0 of its potential returns per unit of risk. Collective Mining is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 277.00 in Collective Mining on August 27, 2024 and sell it today you would earn a total of 68.00 from holding Collective Mining or generate 24.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 47.87% |
| Values | Daily Returns |
Southern Company Series vs. Collective Mining
Performance |
| Timeline |
| Southern Company |
| Collective Mining |
Southern Company and Collective Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Company and Collective Mining
The main advantage of trading using opposite Southern Company and Collective Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Company position performs unexpectedly, Collective Mining 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 Collective Mining will offset losses from the drop in Collective Mining's long position.| Southern Company vs. Southern Co | Southern Company vs. DTE Energy | Southern Company vs. Southern Co | Southern Company vs. Prudential Financial 4125 |
| Collective Mining vs. Nova Minerals Limited | Collective Mining vs. Nova Minerals Limited | Collective Mining vs. Solaris Resources | Collective Mining vs. MGE Energy |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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