Correlation Between US Global and Southern

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

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

Diversification Opportunities for US Global and Southern

0.58

Correlation Coefficient

US Global  Southern

Very weak diversification

The 3 months correlation between GROW and Southern is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding US Global Investors and Southern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern and US Global 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 US Global Investors 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 US Global i.e., US Global and Southern go up and down completely randomly.

Pair Corralation between US Global and Southern

Given the investment horizon of 90 days US Global Investors is expected to under-perform the Southern. In addition to that, US Global is 2.01 times more volatile than Southern Co. It trades about -0.06 of its total potential returns per unit of risk. Southern Co is currently generating about -0.12 per unit of volatility. If you would invest  2,407  in Southern Co on September 4, 2024 and sell it today you would lose (109.00) from holding Southern Co or give up 4.53% of portfolio value over 90 days.

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

US Global Investors  vs.  Southern Co

US Global Investors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US Global Investors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, US Global is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Southern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Southern Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking indicators, Southern is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with US Global and Southern

The main advantage of trading using opposite US Global and Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Global 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 US Global Investors and Southern Co 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 Stocks Directory module to find actively traded stocks across global markets.