Correlation Between ACNB and PrimeEnergy
Can any of the company-specific risk be diversified away by investing in both ACNB and PrimeEnergy 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 ACNB and PrimeEnergy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ACNB Corporation and PrimeEnergy, you can compare the effects of market volatilities on ACNB and PrimeEnergy 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 ACNB with a short position of PrimeEnergy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACNB and PrimeEnergy.
Diversification Opportunities for ACNB and PrimeEnergy
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ACNB and PrimeEnergy is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding ACNB Corp. and PrimeEnergy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PrimeEnergy and ACNB 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 ACNB Corporation are associated (or correlated) with PrimeEnergy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PrimeEnergy has no effect on the direction of ACNB i.e., ACNB and PrimeEnergy go up and down completely randomly.
Pair Corralation between ACNB and PrimeEnergy
Given the investment horizon of 90 days ACNB is expected to generate 2.28 times less return on investment than PrimeEnergy. In addition to that, ACNB is 1.15 times more volatile than PrimeEnergy. It trades about 0.04 of its total potential returns per unit of risk. PrimeEnergy is currently generating about 0.09 per unit of volatility. If you would invest 7,712 in PrimeEnergy on August 27, 2024 and sell it today you would earn a total of 12,583 from holding PrimeEnergy or generate 163.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
ACNB Corp. vs. PrimeEnergy
Performance |
| Timeline |
| ACNB |
| PrimeEnergy |
ACNB and PrimeEnergy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ACNB and PrimeEnergy
The main advantage of trading using opposite ACNB and PrimeEnergy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ACNB position performs unexpectedly, PrimeEnergy 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 PrimeEnergy will offset losses from the drop in PrimeEnergy's long position.The idea behind ACNB Corporation and PrimeEnergy 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.| PrimeEnergy vs. Epsilon Energy | PrimeEnergy vs. Crescent Energy Co | PrimeEnergy vs. Evolution Petroleum | PrimeEnergy vs. MorningStar Partners, LP |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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