Correlation Between 88 Energy and Insignia Financial
Can any of the company-specific risk be diversified away by investing in both 88 Energy and Insignia Financial 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 Insignia Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 88 Energy and Insignia Financial, you can compare the effects of market volatilities on 88 Energy and Insignia Financial 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 Insignia Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of 88 Energy and Insignia Financial.
Diversification Opportunities for 88 Energy and Insignia Financial
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between 88E and Insignia is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding 88 Energy and Insignia Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insignia Financial 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 Insignia Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insignia Financial has no effect on the direction of 88 Energy i.e., 88 Energy and Insignia Financial go up and down completely randomly.
Pair Corralation between 88 Energy and Insignia Financial
Assuming the 90 days trading horizon 88 Energy is expected to generate 6.68 times more return on investment than Insignia Financial. However, 88 Energy is 6.68 times more volatile than Insignia Financial. It trades about 0.05 of its potential returns per unit of risk. Insignia Financial is currently generating about 0.01 per unit of risk. If you would invest 0.99 in 88 Energy on September 2, 2024 and sell it today you would lose (0.89) from holding 88 Energy or give up 89.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
88 Energy vs. Insignia Financial
Performance |
| Timeline |
| 88 Energy |
| Insignia Financial |
88 Energy and Insignia Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 88 Energy and Insignia Financial
The main advantage of trading using opposite 88 Energy and Insignia Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 88 Energy position performs unexpectedly, Insignia Financial 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 Insignia Financial will offset losses from the drop in Insignia Financial's long position.| 88 Energy vs. Truscott Mining Corp | 88 Energy vs. Navigator Global Investments | 88 Energy vs. Flagship Investments | 88 Energy vs. Stelar Metals |
| Insignia Financial vs. WA1 Resources | Insignia Financial vs. Predictive Discovery | Insignia Financial vs. Cooper Metals | Insignia Financial vs. OD6 Metals |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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