Correlation Between Evergy Common and Genie Energy

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

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

Diversification Opportunities for Evergy Common and Genie Energy

-0.67

Correlation Coefficient

Evergy Common  Genie Energy

Excellent diversification

The 3 months correlation between Evergy and Genie is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Evergy Common Stock and Genie Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genie Energy and Evergy Common 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 Evergy Common Stock are associated (or correlated) with Genie Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genie Energy has no effect on the direction of Evergy Common i.e., Evergy Common and Genie Energy go up and down completely randomly.

Pair Corralation between Evergy Common and Genie Energy

Given the investment horizon of 90 days Evergy Common Stock is expected to generate 0.49 times more return on investment than Genie Energy. However, Evergy Common Stock is 2.06 times less risky than Genie Energy. It trades about 0.16 of its potential returns per unit of risk. Genie Energy is currently generating about -0.03 per unit of risk. If you would invest  5,119  in Evergy Common Stock on February 20, 2024 and sell it today you would earn a total of  390.00  from holding Evergy Common Stock or generate 7.62% return on investment over 90 days.

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

Evergy Common Stock  vs.  Genie Energy

Evergy Common Stock

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Evergy Common Stock are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Evergy Common may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Genie Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genie Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Evergy Common and Genie Energy

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

The idea behind Evergy Common Stock and Genie Energy 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.