Correlation Between AXP Energy and Touchstone Exploration
Can any of the company-specific risk be diversified away by investing in both AXP Energy and Touchstone Exploration 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 AXP Energy and Touchstone Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AXP Energy and Touchstone Exploration, you can compare the effects of market volatilities on AXP Energy and Touchstone Exploration 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 AXP Energy with a short position of Touchstone Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXP Energy and Touchstone Exploration.
Diversification Opportunities for AXP Energy and Touchstone Exploration
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AXP and Touchstone is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding AXP Energy and Touchstone Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Exploration and AXP 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 AXP Energy are associated (or correlated) with Touchstone Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Exploration has no effect on the direction of AXP Energy i.e., AXP Energy and Touchstone Exploration go up and down completely randomly.
Pair Corralation between AXP Energy and Touchstone Exploration
Assuming the 90 days horizon AXP Energy is expected to generate 5.75 times more return on investment than Touchstone Exploration. However, AXP Energy is 5.75 times more volatile than Touchstone Exploration. It trades about 0.19 of its potential returns per unit of risk. Touchstone Exploration is currently generating about 0.02 per unit of risk. If you would invest 0.06 in AXP Energy on September 1, 2024 and sell it today you would earn a total of 0.03 from holding AXP Energy or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AXP Energy vs. Touchstone Exploration
Performance |
| Timeline |
| AXP Energy |
| Touchstone Exploration |
AXP Energy and Touchstone Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AXP Energy and Touchstone Exploration
The main advantage of trading using opposite AXP Energy and Touchstone Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AXP Energy position performs unexpectedly, Touchstone Exploration 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 Touchstone Exploration will offset losses from the drop in Touchstone Exploration's long position.| AXP Energy vs. Permian Resources | AXP Energy vs. Devon Energy | AXP Energy vs. EOG Resources | AXP Energy vs. Coterra Energy |
| Touchstone Exploration vs. Altura Energy | Touchstone Exploration vs. AXP Energy | Touchstone Exploration vs. Canacol Energy | Touchstone Exploration vs. Parex 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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