Correlation Between Alibaba Group and Pioneer Natural
Can any of the company-specific risk be diversified away by investing in both Alibaba Group and Pioneer Natural 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 Alibaba Group and Pioneer Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alibaba Group Holding and Pioneer Natural Resources, you can compare the effects of market volatilities on Alibaba Group and Pioneer Natural 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 Alibaba Group with a short position of Pioneer Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and Pioneer Natural.
Diversification Opportunities for Alibaba Group and Pioneer Natural
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alibaba and Pioneer is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and Pioneer Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer Natural Resources and Alibaba Group 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 Alibaba Group Holding are associated (or correlated) with Pioneer Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer Natural Resources has no effect on the direction of Alibaba Group i.e., Alibaba Group and Pioneer Natural go up and down completely randomly.
Pair Corralation between Alibaba Group and Pioneer Natural
Assuming the 90 days horizon Alibaba Group is expected to generate 44.84 times less return on investment than Pioneer Natural. But when comparing it to its historical volatility, Alibaba Group Holding is 20.86 times less risky than Pioneer Natural. It trades about 0.02 of its potential returns per unit of risk. Pioneer Natural Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 17,858 in Pioneer Natural Resources on September 12, 2024 and sell it today you would lose (17,812) from holding Pioneer Natural Resources or give up 99.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Alibaba Group Holding vs. Pioneer Natural Resources
Performance |
| Timeline |
| Alibaba Group Holding |
| Pioneer Natural Resources |
Alibaba Group and Pioneer Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alibaba Group and Pioneer Natural
The main advantage of trading using opposite Alibaba Group and Pioneer Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group position performs unexpectedly, Pioneer Natural 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 Pioneer Natural will offset losses from the drop in Pioneer Natural's long position.| Alibaba Group vs. Consolidated Communications Holdings | Alibaba Group vs. Spirent Communications plc | Alibaba Group vs. PICKN PAY STORES | Alibaba Group vs. Shenandoah Telecommunications |
| Pioneer Natural vs. Materialise NV | Pioneer Natural vs. DICKER DATA LTD | Pioneer Natural vs. Hyrican Informationssysteme Aktiengesellschaft | Pioneer Natural vs. Science Applications International |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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