Correlation Between Birchcliff Energy and Gear Energy
Can any of the company-specific risk be diversified away by investing in both Birchcliff Energy and Gear Energy 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 Birchcliff Energy and Gear Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Birchcliff Energy and Gear Energy, you can compare the effects of market volatilities on Birchcliff Energy and Gear Energy 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 Birchcliff Energy with a short position of Gear Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Birchcliff Energy and Gear Energy.
Diversification Opportunities for Birchcliff Energy and Gear Energy
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Birchcliff and Gear is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Birchcliff Energy and Gear Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gear Energy and Birchcliff 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 Birchcliff Energy are associated (or correlated) with Gear Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gear Energy has no effect on the direction of Birchcliff Energy i.e., Birchcliff Energy and Gear Energy go up and down completely randomly.
Pair Corralation between Birchcliff Energy and Gear Energy
Assuming the 90 days horizon Birchcliff Energy is expected to under-perform the Gear Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Birchcliff Energy is 1.22 times less risky than Gear Energy. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Gear Energy is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 65.00 in Gear Energy on August 28, 2024 and sell it today you would lose (26.00) from holding Gear Energy or give up 40.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Birchcliff Energy vs. Gear Energy
Performance |
| Timeline |
| Birchcliff Energy |
| Gear Energy |
Birchcliff Energy and Gear Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Birchcliff Energy and Gear Energy
The main advantage of trading using opposite Birchcliff Energy and Gear Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Birchcliff Energy position performs unexpectedly, Gear Energy 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 Gear Energy will offset losses from the drop in Gear Energy's long position.| Birchcliff Energy vs. Petroleo Brasileiro Petrobras | Birchcliff Energy vs. Equinor ASA ADR | Birchcliff Energy vs. Eni SpA ADR | Birchcliff Energy vs. YPF Sociedad Anonima |
| Gear Energy vs. Tamarack Valley Energy | Gear Energy vs. MEG Energy Corp | Gear Energy vs. Cardinal Energy | Gear Energy vs. Whitecap 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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