Correlation Between Barnwell Industries and Mexco Energy
Can any of the company-specific risk be diversified away by investing in both Barnwell Industries and Mexco 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 Barnwell Industries and Mexco Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnwell Industries and Mexco Energy, you can compare the effects of market volatilities on Barnwell Industries and Mexco 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 Barnwell Industries with a short position of Mexco Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnwell Industries and Mexco Energy.
Diversification Opportunities for Barnwell Industries and Mexco Energy
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Barnwell and Mexco is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Barnwell Industries and Mexco Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mexco Energy and Barnwell Industries 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 Barnwell Industries are associated (or correlated) with Mexco Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mexco Energy has no effect on the direction of Barnwell Industries i.e., Barnwell Industries and Mexco Energy go up and down completely randomly.
Pair Corralation between Barnwell Industries and Mexco Energy
Considering the 90-day investment horizon Barnwell Industries is expected to under-perform the Mexco Energy. But the stock apears to be less risky and, when comparing its historical volatility, Barnwell Industries is 1.17 times less risky than Mexco Energy. The stock trades about -0.03 of its potential returns per unit of risk. The Mexco Energy is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,292 in Mexco Energy on August 24, 2024 and sell it today you would lose (86.00) from holding Mexco Energy or give up 6.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Barnwell Industries vs. Mexco Energy
Performance |
| Timeline |
| Barnwell Industries |
| Mexco Energy |
Barnwell Industries and Mexco Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barnwell Industries and Mexco Energy
The main advantage of trading using opposite Barnwell Industries and Mexco Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnwell Industries position performs unexpectedly, Mexco 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 Mexco Energy will offset losses from the drop in Mexco Energy's long position.| Barnwell Industries vs. Houston American Energy | Barnwell Industries vs. Mexco Energy | Barnwell Industries vs. PHX Minerals | Barnwell Industries vs. Ring Energy |
| Mexco Energy vs. PHX Minerals | Mexco Energy vs. Granite Ridge Resources | Mexco Energy vs. XXL Energy Corp | Mexco Energy vs. Permianville Royalty Trust |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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