Correlation Between 88 Energy and Nova Eye
Can any of the company-specific risk be diversified away by investing in both 88 Energy and Nova Eye 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 Nova Eye into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 88 Energy and Nova Eye Medical, you can compare the effects of market volatilities on 88 Energy and Nova Eye 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 Nova Eye. Check out your portfolio center. Please also check ongoing floating volatility patterns of 88 Energy and Nova Eye.
Diversification Opportunities for 88 Energy and Nova Eye
Weak diversification
The 3 months correlation between 88E and Nova is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding 88 Energy and Nova Eye Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Eye Medical 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 Nova Eye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Eye Medical has no effect on the direction of 88 Energy i.e., 88 Energy and Nova Eye go up and down completely randomly.
Pair Corralation between 88 Energy and Nova Eye
Assuming the 90 days trading horizon 88 Energy is expected to generate 3.4 times more return on investment than Nova Eye. However, 88 Energy is 3.4 times more volatile than Nova Eye Medical. It trades about 0.09 of its potential returns per unit of risk. Nova Eye Medical is currently generating about 0.04 per unit of risk. If you would invest 0.40 in 88 Energy on September 4, 2024 and sell it today you would lose (0.20) from holding 88 Energy or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
88 Energy vs. Nova Eye Medical
Performance |
| Timeline |
| 88 Energy |
| Nova Eye Medical |
88 Energy and Nova Eye Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 88 Energy and Nova Eye
The main advantage of trading using opposite 88 Energy and Nova Eye positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 88 Energy position performs unexpectedly, Nova Eye 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 Nova Eye will offset losses from the drop in Nova Eye's long position.| 88 Energy vs. Ainsworth Game Technology | 88 Energy vs. Mount Gibson Iron | 88 Energy vs. Computershare | 88 Energy vs. The Environmental Group |
| Nova Eye vs. Energy Resources | Nova Eye vs. 88 Energy | Nova Eye vs. Amani Gold | Nova Eye 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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