Correlation Between Credit Corp and Odyssey Energy
Can any of the company-specific risk be diversified away by investing in both Credit Corp and Odyssey 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 Credit Corp and Odyssey Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Credit Corp Group and Odyssey Energy, you can compare the effects of market volatilities on Credit Corp and Odyssey 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 Credit Corp with a short position of Odyssey Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credit Corp and Odyssey Energy.
Diversification Opportunities for Credit Corp and Odyssey Energy
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Credit and Odyssey is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Credit Corp Group and Odyssey Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odyssey Energy and Credit Corp 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 Credit Corp Group are associated (or correlated) with Odyssey Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odyssey Energy has no effect on the direction of Credit Corp i.e., Credit Corp and Odyssey Energy go up and down completely randomly.
Pair Corralation between Credit Corp and Odyssey Energy
Assuming the 90 days trading horizon Credit Corp is expected to generate 4.0 times less return on investment than Odyssey Energy. But when comparing it to its historical volatility, Credit Corp Group is 2.35 times less risky than Odyssey Energy. It trades about 0.01 of its potential returns per unit of risk. Odyssey Energy is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3.20 in Odyssey Energy on November 28, 2024 and sell it today you would lose (1.00) from holding Odyssey Energy or give up 31.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Credit Corp Group vs. Odyssey Energy
Performance |
| Timeline |
| Credit Corp Group |
| Odyssey Energy |
Credit Corp and Odyssey Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Credit Corp and Odyssey Energy
The main advantage of trading using opposite Credit Corp and Odyssey Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Credit Corp position performs unexpectedly, Odyssey 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 Odyssey Energy will offset losses from the drop in Odyssey Energy's long position.| Credit Corp vs. Westpac Banking | Credit Corp vs. TPG Telecom | Credit Corp vs. Computershare | Credit Corp vs. Treasury Wine Estates |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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