Correlation Between Georgia Power and Stifel Financial

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

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

Diversification Opportunities for Georgia Power and Stifel Financial

0.96

Correlation Coefficient

Georgia Power  Stifel Financial

Almost no diversification

The 3 months correlation between Georgia and Stifel is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Georgia Power Co and Stifel Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stifel Financial and Georgia Power 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 Georgia Power Co are associated (or correlated) with Stifel Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stifel Financial has no effect on the direction of Georgia Power i.e., Georgia Power and Stifel Financial go up and down completely randomly.

Pair Corralation between Georgia Power and Stifel Financial

Given the investment horizon of 90 days Georgia Power Co is expected to under-perform the Stifel Financial. In addition to that, Georgia Power is 1.29 times more volatile than Stifel Financial. It trades about -0.21 of its total potential returns per unit of risk. Stifel Financial is currently generating about -0.24 per unit of volatility. If you would invest  2,199  in Stifel Financial on September 20, 2024 and sell it today you would lose (48.00) from holding Stifel Financial or give up 2.18% of portfolio value over 90 days.

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

Georgia Power Co  vs.  Stifel Financial

Georgia Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Georgia Power Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's forward-looking indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Stifel Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stifel Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Georgia Power and Stifel Financial

The main advantage of trading using opposite Georgia Power and Stifel Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Georgia Power position performs unexpectedly, Stifel Financial 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 Stifel Financial will offset losses from the drop in Stifel Financial's long position.

The idea behind Georgia Power Co and Stifel Financial 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.