Correlation Between Trupanion and SOUTHERN

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

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

Diversification Opportunities for Trupanion and SOUTHERN

0.5

Correlation Coefficient

Trupanion  SOUTHERN

Very weak diversification

The 3 months correlation between Trupanion and SOUTHERN is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Trupanion 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 Trupanion 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 Trupanion 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 Trupanion i.e., Trupanion and SOUTHERN go up and down completely randomly.

Pair Corralation between Trupanion and SOUTHERN

Given the investment horizon of 90 days Trupanion is expected to under-perform the SOUTHERN. In addition to that, Trupanion is 1.85 times more volatile than SOUTHERN PER CORP. It trades about -0.07 of its total potential returns per unit of risk. SOUTHERN PER CORP is currently generating about 0.23 per unit of volatility. If you would invest  10,673  in SOUTHERN PER CORP on October 22, 2024 and sell it today you would earn a total of  751.00  from holding SOUTHERN PER CORP or generate 7.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

Trupanion  vs.  SOUTHERN PER CORP

Trupanion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trupanion has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

SOUTHERN PER P

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SOUTHERN PER CORP are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Trupanion and SOUTHERN

The main advantage of trading using opposite Trupanion and SOUTHERN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trupanion 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 Trupanion 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.