Correlation Between Public Service and Southern
Can any of the company-specific risk be diversified away by investing in both Public Service 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 Public Service and Southern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Public Service Enterprise and Southern Company, you can compare the effects of market volatilities on Public Service 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 Public Service with a short position of Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Service and Southern.
Diversification Opportunities for Public Service and Southern
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Public and Southern is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Public Service Enterprise and Southern Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern and Public Service 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 Public Service Enterprise 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 Public Service i.e., Public Service and Southern go up and down completely randomly.
Pair Corralation between Public Service and Southern
Considering the 90-day investment horizon Public Service is expected to generate 35.0 times less return on investment than Southern. In addition to that, Public Service is 1.24 times more volatile than Southern Company. It trades about 0.0 of its total potential returns per unit of risk. Southern Company is currently generating about 0.01 per unit of volatility. If you would invest 8,978 in Southern Company on March 17, 2025 and sell it today you would earn a total of 57.00 from holding Southern Company or generate 0.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Public Service Enterprise vs. Southern Company
Performance |
| Timeline |
| Public Service Enterprise |
| Southern |
Public Service and Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Public Service and Southern
The main advantage of trading using opposite Public Service and Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Service 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.| Public Service vs. CenterPoint Energy | Public Service vs. FirstEnergy | Public Service vs. Pinnacle West Capital | Public Service vs. Edison International |
| Southern vs. Dominion Energy | Southern vs. American Electric Power | Southern vs. Nextera Energy | Southern vs. Consolidated Edison |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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