Correlation Between 88 Energy and Collins Foods
Can any of the company-specific risk be diversified away by investing in both 88 Energy and Collins Foods 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 88 Energy and Collins Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 88 Energy and Collins Foods, you can compare the effects of market volatilities on 88 Energy and Collins Foods 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 88 Energy with a short position of Collins Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of 88 Energy and Collins Foods.
Diversification Opportunities for 88 Energy and Collins Foods
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 88E and Collins is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding 88 Energy and Collins Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collins Foods and 88 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 88 Energy are associated (or correlated) with Collins Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collins Foods has no effect on the direction of 88 Energy i.e., 88 Energy and Collins Foods go up and down completely randomly.
Pair Corralation between 88 Energy and Collins Foods
Assuming the 90 days trading horizon 88 Energy is expected to generate 17.23 times more return on investment than Collins Foods. However, 88 Energy is 17.23 times more volatile than Collins Foods. It trades about 0.12 of its potential returns per unit of risk. Collins Foods is currently generating about -0.1 per unit of risk. If you would invest 0.20 in 88 Energy on September 13, 2024 and sell it today you would earn a total of 0.00 from holding 88 Energy or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
88 Energy vs. Collins Foods
Performance |
| Timeline |
| 88 Energy |
| Collins Foods |
88 Energy and Collins Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 88 Energy and Collins Foods
The main advantage of trading using opposite 88 Energy and Collins Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 88 Energy position performs unexpectedly, Collins Foods 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 Collins Foods will offset losses from the drop in Collins Foods' long position.| 88 Energy vs. Westpac Banking | 88 Energy vs. ABACUS STORAGE KING | 88 Energy vs. Odyssey Energy | 88 Energy vs. Sims |
| Collins Foods vs. Energy Resources | Collins Foods vs. 88 Energy | Collins Foods vs. Amani Gold | Collins Foods vs. A1 Investments Resources |
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.
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