Correlation Between BP PLC and Profire Ene
Can any of the company-specific risk be diversified away by investing in both BP PLC and Profire Ene 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 BP PLC and Profire Ene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BP PLC ADR and Profire Ene, you can compare the effects of market volatilities on BP PLC and Profire Ene 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 BP PLC with a short position of Profire Ene. Check out your portfolio center. Please also check ongoing floating volatility patterns of BP PLC and Profire Ene.
Diversification Opportunities for BP PLC and Profire Ene
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BP PLC and Profire is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding BP PLC ADR and Profire Ene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profire Ene and BP PLC 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 BP PLC ADR are associated (or correlated) with Profire Ene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profire Ene has no effect on the direction of BP PLC i.e., BP PLC and Profire Ene go up and down completely randomly.
Pair Corralation between BP PLC and Profire Ene
Allowing for the 90-day total investment horizon BP PLC ADR is expected to under-perform the Profire Ene. But the stock apears to be less risky and, when comparing its historical volatility, BP PLC ADR is 3.16 times less risky than Profire Ene. The stock trades about 0.0 of its potential returns per unit of risk. The Profire Ene is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 105.00 in Profire Ene on August 28, 2024 and sell it today you would earn a total of 147.00 from holding Profire Ene or generate 140.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
BP PLC ADR vs. Profire Ene
Performance |
| Timeline |
| BP PLC ADR |
| Profire Ene |
BP PLC and Profire Ene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BP PLC and Profire Ene
The main advantage of trading using opposite BP PLC and Profire Ene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BP PLC position performs unexpectedly, Profire Ene 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 Profire Ene will offset losses from the drop in Profire Ene's long position.| BP PLC vs. TotalEnergies SE ADR | BP PLC vs. Chevron Corp | BP PLC vs. Exxon Mobil Corp | BP PLC vs. Equinor ASA ADR |
| Profire Ene vs. Enservco Co | Profire Ene vs. Nine Energy Service | Profire Ene vs. Enerflex | Profire Ene vs. Geospace Technologies |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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