Correlation Between United States and Southern
Can any of the company-specific risk be diversified away by investing in both United States and Southern 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 United States and Southern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Cellular and Southern Co, you can compare the effects of market volatilities on United States and Southern 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 United States with a short position of Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Southern.
Diversification Opportunities for United States and Southern
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and Southern is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding United States Cellular and Southern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern and United States 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 United States Cellular are associated (or correlated) with Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern has no effect on the direction of United States i.e., United States and Southern go up and down completely randomly.
Pair Corralation between United States and Southern
Considering the 90-day investment horizon United States Cellular is expected to generate 0.89 times more return on investment than Southern. However, United States Cellular is 1.12 times less risky than Southern. It trades about 0.09 of its potential returns per unit of risk. Southern Co is currently generating about -0.04 per unit of risk. If you would invest 2,259 in United States Cellular on August 28, 2024 and sell it today you would earn a total of 26.00 from holding United States Cellular or generate 1.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Cellular vs. Southern Co
Performance |
| Timeline |
| United States Cellular |
| Southern |
United States and Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Southern
The main advantage of trading using opposite United States and Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, Southern 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 Southern will offset losses from the drop in Southern's long position.| United States vs. United States Cellular | United States vs. United States Cellular | United States vs. Office Properties Income | United States vs. Southern Company Series |
| Southern vs. AKITA Drilling | Southern vs. Transocean | Southern vs. Universal Technical Institute | Southern vs. AMREP |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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