Correlation Between Genie Energy and Southern

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

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

Diversification Opportunities for Genie Energy and Southern

0.68

Correlation Coefficient

Genie Energy  Southern

Poor diversification

The 3 months correlation between Genie and Southern is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Genie Energy and Southern Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern and Genie Energy 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 Genie Energy 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 Genie Energy i.e., Genie Energy and Southern go up and down completely randomly.

Pair Corralation between Genie Energy and Southern

Considering the 90-day investment horizon Genie Energy is expected to generate 2.49 times more return on investment than Southern. However, Genie Energy is 2.49 times more volatile than Southern Company. It trades about 0.04 of its potential returns per unit of risk. Southern Company is currently generating about 0.04 per unit of risk. If you would invest  958.00  in Genie Energy on September 21, 2024 and sell it today you would earn a total of  500.00  from holding Genie Energy or generate 52.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Genie Energy  vs.  Southern Company

Genie Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genie Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Southern

Risk-Adjusted Performance

0 of 100

Very 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 latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Genie Energy and Southern

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

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.