Correlation Between CES Energy and Tamarack Valley
Can any of the company-specific risk be diversified away by investing in both CES Energy and Tamarack Valley 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 Tamarack Valley 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 Tamarack Valley Energy, you can compare the effects of market volatilities on CES Energy and Tamarack Valley 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 Tamarack Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of CES Energy and Tamarack Valley.
Diversification Opportunities for CES Energy and Tamarack Valley
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CES and Tamarack is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding CES Energy Solutions and Tamarack Valley Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tamarack Valley Energy 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 Tamarack Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tamarack Valley Energy has no effect on the direction of CES Energy i.e., CES Energy and Tamarack Valley go up and down completely randomly.
Pair Corralation between CES Energy and Tamarack Valley
Assuming the 90 days horizon CES Energy Solutions is expected to generate 1.21 times more return on investment than Tamarack Valley. However, CES Energy is 1.21 times more volatile than Tamarack Valley Energy. It trades about 0.16 of its potential returns per unit of risk. Tamarack Valley Energy is currently generating about 0.08 per unit of risk. If you would invest 253.00 in CES Energy Solutions on September 12, 2024 and sell it today you would earn a total of 428.00 from holding CES Energy Solutions or generate 169.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CES Energy Solutions vs. Tamarack Valley Energy
Performance |
| Timeline |
| CES Energy Solutions |
| Tamarack Valley Energy |
CES Energy and Tamarack Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CES Energy and Tamarack Valley
The main advantage of trading using opposite CES Energy and Tamarack Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CES Energy position performs unexpectedly, Tamarack Valley 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 Tamarack Valley will offset losses from the drop in Tamarack Valley'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 |
| Tamarack Valley vs. POSCO Holdings | Tamarack Valley vs. Schweizerische Nationalbank | Tamarack Valley vs. Berkshire Hathaway | Tamarack Valley vs. Berkshire Hathaway |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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