Correlation Between Old Republic and SOUTHERN

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

Diversification Opportunities for Old Republic and SOUTHERN

-0.46
  Correlation Coefficient

Very good diversification

The 3 months correlation between Old and SOUTHERN is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Old Republic International and SOUTHERN PER CORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOUTHERN PER P and Old Republic 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 Old Republic International 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 PER P has no effect on the direction of Old Republic i.e., Old Republic and SOUTHERN go up and down completely randomly.

Pair Corralation between Old Republic and SOUTHERN

Considering the 90-day investment horizon Old Republic International is expected to under-perform the SOUTHERN. In addition to that, Old Republic is 1.07 times more volatile than SOUTHERN PER CORP. It trades about -0.18 of its total potential returns per unit of risk. SOUTHERN PER CORP is currently generating about 0.15 per unit of volatility. If you would invest  11,500  in SOUTHERN PER CORP on September 27, 2024 and sell it today you would earn a total of  310.00  from holding SOUTHERN PER CORP or generate 2.7% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy68.18%
ValuesDaily Returns

Old Republic International  vs.  SOUTHERN PER CORP

 Performance 
       Timeline  
Old Republic Interna 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Old Republic International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Old Republic is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.
SOUTHERN PER P 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SOUTHERN PER CORP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SOUTHERN is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Old Republic and SOUTHERN Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Old Republic and SOUTHERN

The main advantage of trading using opposite Old Republic and SOUTHERN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Republic 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 Old Republic International and SOUTHERN PER CORP 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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