Correlation Between Southern and Avangrid

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

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

Diversification Opportunities for Southern and Avangrid

0.0

Correlation Coefficient

Southern  Avangrid

Pay attention - limited upside

The 3 months correlation between Southern and Avangrid is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Southern Company and Avangrid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avangrid and Southern 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 Southern Company are associated (or correlated) with Avangrid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avangrid has no effect on the direction of Southern i.e., Southern and Avangrid go up and down completely randomly.

Pair Corralation between Southern and Avangrid

If you would invest  8,216  in Southern Company on December 20, 2024 and sell it today you would earn a total of  744.00  from holding Southern Company or generate 9.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Southern Company  vs.  Avangrid

Southern

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Southern Company are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Southern may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Avangrid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Avangrid has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Avangrid is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Southern and Avangrid

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

The idea behind Southern Company and Avangrid 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.