Correlation Between Headwater Exploration and Capricorn Energy
Can any of the company-specific risk be diversified away by investing in both Headwater Exploration and Capricorn 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 Headwater Exploration and Capricorn Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Headwater Exploration and Capricorn Energy PLC, you can compare the effects of market volatilities on Headwater Exploration and Capricorn 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 Headwater Exploration with a short position of Capricorn Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Headwater Exploration and Capricorn Energy.
Diversification Opportunities for Headwater Exploration and Capricorn Energy
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Headwater and Capricorn is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Headwater Exploration and Capricorn Energy PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capricorn Energy PLC and Headwater Exploration 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 Headwater Exploration are associated (or correlated) with Capricorn Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capricorn Energy PLC has no effect on the direction of Headwater Exploration i.e., Headwater Exploration and Capricorn Energy go up and down completely randomly.
Pair Corralation between Headwater Exploration and Capricorn Energy
Assuming the 90 days horizon Headwater Exploration is expected to generate 4.89 times less return on investment than Capricorn Energy. But when comparing it to its historical volatility, Headwater Exploration is 4.05 times less risky than Capricorn Energy. It trades about 0.03 of its potential returns per unit of risk. Capricorn Energy PLC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 626.00 in Capricorn Energy PLC on August 26, 2024 and sell it today you would lose (56.00) from holding Capricorn Energy PLC or give up 8.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 91.53% |
| Values | Daily Returns |
Headwater Exploration vs. Capricorn Energy PLC
Performance |
| Timeline |
| Headwater Exploration |
| Capricorn Energy PLC |
Headwater Exploration and Capricorn Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Headwater Exploration and Capricorn Energy
The main advantage of trading using opposite Headwater Exploration and Capricorn Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Headwater Exploration position performs unexpectedly, Capricorn 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 Capricorn Energy will offset losses from the drop in Capricorn Energy's long position.| Headwater Exploration vs. ROK Resources | Headwater Exploration vs. Pieridae Energy Limited | Headwater Exploration vs. Kelt Exploration | Headwater Exploration vs. Athabasca Oil Corp |
| Capricorn Energy vs. San Leon Energy | Capricorn Energy vs. Tullow Oil PLC | Capricorn Energy vs. Dno ASA | Capricorn Energy vs. PetroShale |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |