Correlation Between Bonterra Energy and Maxim Power
Can any of the company-specific risk be diversified away by investing in both Bonterra Energy and Maxim Power 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 Bonterra Energy and Maxim Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bonterra Energy Corp and Maxim Power Corp, you can compare the effects of market volatilities on Bonterra Energy and Maxim Power 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 Bonterra Energy with a short position of Maxim Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bonterra Energy and Maxim Power.
Diversification Opportunities for Bonterra Energy and Maxim Power
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bonterra and Maxim is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Bonterra Energy Corp and Maxim Power Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maxim Power Corp and Bonterra 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 Bonterra Energy Corp are associated (or correlated) with Maxim Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maxim Power Corp has no effect on the direction of Bonterra Energy i.e., Bonterra Energy and Maxim Power go up and down completely randomly.
Pair Corralation between Bonterra Energy and Maxim Power
Assuming the 90 days horizon Bonterra Energy is expected to generate 14.27 times less return on investment than Maxim Power. But when comparing it to its historical volatility, Bonterra Energy Corp is 1.2 times less risky than Maxim Power. It trades about 0.02 of its potential returns per unit of risk. Maxim Power Corp is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 296.00 in Maxim Power Corp on August 27, 2024 and sell it today you would earn a total of 54.00 from holding Maxim Power Corp or generate 18.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bonterra Energy Corp vs. Maxim Power Corp
Performance |
| Timeline |
| Bonterra Energy Corp |
| Maxim Power Corp |
Bonterra Energy and Maxim Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bonterra Energy and Maxim Power
The main advantage of trading using opposite Bonterra Energy and Maxim Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bonterra Energy position performs unexpectedly, Maxim Power 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 Maxim Power will offset losses from the drop in Maxim Power's long position.| Bonterra Energy vs. Petroleo Brasileiro Petrobras | Bonterra Energy vs. Equinor ASA ADR | Bonterra Energy vs. Eni SpA ADR | Bonterra Energy vs. YPF Sociedad Anonima |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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