Correlation Between CES Energy and Essential Energy
Can any of the company-specific risk be diversified away by investing in both CES Energy and Essential 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 CES Energy and Essential Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CES Energy Solutions and Essential Energy Services, you can compare the effects of market volatilities on CES Energy and Essential 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 CES Energy with a short position of Essential Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of CES Energy and Essential Energy.
Diversification Opportunities for CES Energy and Essential Energy
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CES and Essential is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding CES Energy Solutions and Essential Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essential Energy Services and CES 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 CES Energy Solutions are associated (or correlated) with Essential Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essential Energy Services has no effect on the direction of CES Energy i.e., CES Energy and Essential Energy go up and down completely randomly.
Pair Corralation between CES Energy and Essential Energy
If you would invest 501.00 in CES Energy Solutions on September 3, 2024 and sell it today you would earn a total of 193.00 from holding CES Energy Solutions or generate 38.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.8% |
| Values | Daily Returns |
CES Energy Solutions vs. Essential Energy Services
Performance |
| Timeline |
| CES Energy Solutions |
| Essential Energy Services |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
CES Energy and Essential Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CES Energy and Essential Energy
The main advantage of trading using opposite CES Energy and Essential Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CES Energy position performs unexpectedly, Essential 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 Essential Energy will offset losses from the drop in Essential Energy's long position.| CES Energy vs. Tamarack Valley Energy | CES Energy vs. Secure Energy Services | CES Energy vs. Caixabank SA ADR | CES Energy vs. High Arctic Energy |
| Essential Energy vs. Source Energy Services | Essential Energy vs. Total Energy Services | Essential Energy vs. Trican Well Service | Essential Energy vs. STEP Energy Services |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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