Correlation Between Evergy, and Southern

Can any of the company-specific risk be diversified away by investing in both Evergy, 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 Evergy, and Southern into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Evergy, and Southern Company, you can compare the effects of market volatilities on Evergy, 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 Evergy, with a short position of Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evergy, and Southern.

Diversification Opportunities for Evergy, and Southern

0.06

Correlation Coefficient

Evergy,  Southern

Significant diversification

The 3 months correlation between Evergy, and Southern is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Evergy, and Southern Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern 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 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 Evergy, i.e., Evergy, and Southern go up and down completely randomly.

Pair Corralation between Evergy, and Southern

Given the investment horizon of 90 days Evergy, is expected to generate 0.88 times more return on investment than Southern. However, Evergy, is 1.14 times less risky than Southern. It trades about 0.14 of its potential returns per unit of risk. Southern Company is currently generating about 0.0 per unit of risk. If you would invest  5,908  in Evergy, on September 3, 2024 and sell it today you would earn a total of  453.00  from holding Evergy, or generate 7.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Evergy,  vs.  Southern Company

Evergy,

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Evergy, are ranked lower than 10 (%) 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 January 2025.

Southern

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Southern Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Southern is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Evergy, and Southern

The main advantage of trading using opposite Evergy, and Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evergy, 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.

The idea behind Evergy, and Southern Company 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.