Correlation Between Genie Energy and IDACORP

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

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

Diversification Opportunities for Genie Energy and IDACORP

-0.62

Correlation Coefficient

Genie Energy  IDACORP

Excellent diversification

The 3 months correlation between Genie and IDACORP is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Genie Energy and IDACORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDACORP and Genie Energy 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 Genie Energy are associated (or correlated) with IDACORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDACORP has no effect on the direction of Genie Energy i.e., Genie Energy and IDACORP go up and down completely randomly.

Pair Corralation between Genie Energy and IDACORP

Considering the 90-day investment horizon Genie Energy is expected to under-perform the IDACORP. In addition to that, Genie Energy is 2.45 times more volatile than IDACORP. It trades about -0.08 of its total potential returns per unit of risk. IDACORP is currently generating about 0.17 per unit of volatility. If you would invest  8,822  in IDACORP on February 18, 2024 and sell it today you would earn a total of  1,025  from holding IDACORP or generate 11.62% return on investment over 90 days.

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

Genie Energy  vs.  IDACORP

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 unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

IDACORP

Risk-Adjusted Performance

13 of 100

Good

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

Pair Trading with Genie Energy and IDACORP

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

The idea behind Genie Energy and IDACORP 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.