Correlation Between ADX Energy and Pine Cliff
Can any of the company-specific risk be diversified away by investing in both ADX Energy and Pine Cliff 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 ADX Energy and Pine Cliff into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADX Energy and Pine Cliff Energy, you can compare the effects of market volatilities on ADX Energy and Pine Cliff 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 ADX Energy with a short position of Pine Cliff. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADX Energy and Pine Cliff.
Diversification Opportunities for ADX Energy and Pine Cliff
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ADX and Pine is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding ADX Energy and Pine Cliff Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pine Cliff Energy and ADX 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 ADX Energy are associated (or correlated) with Pine Cliff. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pine Cliff Energy has no effect on the direction of ADX Energy i.e., ADX Energy and Pine Cliff go up and down completely randomly.
Pair Corralation between ADX Energy and Pine Cliff
Assuming the 90 days horizon ADX Energy is expected to generate 5.49 times more return on investment than Pine Cliff. However, ADX Energy is 5.49 times more volatile than Pine Cliff Energy. It trades about 0.04 of its potential returns per unit of risk. Pine Cliff Energy is currently generating about -0.05 per unit of risk. If you would invest 10.00 in ADX Energy on August 26, 2024 and sell it today you would lose (6.00) from holding ADX Energy or give up 60.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
ADX Energy vs. Pine Cliff Energy
Performance |
| Timeline |
| ADX Energy |
| Pine Cliff Energy |
ADX Energy and Pine Cliff Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADX Energy and Pine Cliff
The main advantage of trading using opposite ADX Energy and Pine Cliff positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADX Energy position performs unexpectedly, Pine Cliff 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 Pine Cliff will offset losses from the drop in Pine Cliff's long position.| ADX Energy vs. Permian Resources | ADX Energy vs. Devon Energy | ADX Energy vs. EOG Resources | ADX Energy vs. Coterra Energy |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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