Correlation Between Evergy, and MGE Energy

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Can any of the company-specific risk be diversified away by investing in both Evergy, and MGE Energy 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 Evergy, and MGE Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evergy, and MGE Energy, you can compare the effects of market volatilities on Evergy, and MGE Energy 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 Evergy, with a short position of MGE Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evergy, and MGE Energy.

Diversification Opportunities for Evergy, and MGE Energy

-0.04
  Correlation Coefficient

Good diversification

The 3 months correlation between Evergy, and MGE is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Evergy, and MGE Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGE Energy and Evergy, 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 Evergy, are associated (or correlated) with MGE Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGE Energy has no effect on the direction of Evergy, i.e., Evergy, and MGE Energy go up and down completely randomly.

Pair Corralation between Evergy, and MGE Energy

Given the investment horizon of 90 days Evergy, is expected to generate 0.54 times more return on investment than MGE Energy. However, Evergy, is 1.84 times less risky than MGE Energy. It trades about 0.14 of its potential returns per unit of risk. MGE Energy is currently generating about -0.11 per unit of risk. If you would invest  6,463  in Evergy, on November 28, 2024 and sell it today you would earn a total of  475.00  from holding Evergy, or generate 7.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Evergy,  vs.  MGE Energy

 Performance 
       Timeline  
Evergy, 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Evergy, are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Evergy, may actually be approaching a critical reversion point that can send shares even higher in March 2025.
MGE Energy 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days MGE Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Evergy, and MGE Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Evergy, and MGE Energy

The main advantage of trading using opposite Evergy, and MGE Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evergy, position performs unexpectedly, MGE Energy 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 MGE Energy will offset losses from the drop in MGE Energy's long position.
The idea behind Evergy, and MGE Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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