Correlation Between CES Energy and Big Rock
Can any of the company-specific risk be diversified away by investing in both CES Energy and Big Rock 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 Big Rock 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 Big Rock Brewery, you can compare the effects of market volatilities on CES Energy and Big Rock 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 Big Rock. Check out your portfolio center. Please also check ongoing floating volatility patterns of CES Energy and Big Rock.
Diversification Opportunities for CES Energy and Big Rock
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CES and Big is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding CES Energy Solutions and Big Rock Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Rock Brewery 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 Big Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Rock Brewery has no effect on the direction of CES Energy i.e., CES Energy and Big Rock go up and down completely randomly.
Pair Corralation between CES Energy and Big Rock
Assuming the 90 days trading horizon CES Energy is expected to generate 1.83 times less return on investment than Big Rock. But when comparing it to its historical volatility, CES Energy Solutions is 2.44 times less risky than Big Rock. It trades about 0.09 of its potential returns per unit of risk. Big Rock Brewery is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 110.00 in Big Rock Brewery on September 12, 2024 and sell it today you would earn a total of 5.00 from holding Big Rock Brewery or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CES Energy Solutions vs. Big Rock Brewery
Performance |
| Timeline |
| CES Energy Solutions |
| Big Rock Brewery |
CES Energy and Big Rock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CES Energy and Big Rock
The main advantage of trading using opposite CES Energy and Big Rock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CES Energy position performs unexpectedly, Big Rock 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 Big Rock will offset losses from the drop in Big Rock's long position.| CES Energy vs. Secure Energy Services | CES Energy vs. Ensign Energy Services | CES Energy vs. Kelt Exploration | CES Energy vs. Trican Well Service |
| Big Rock vs. iShares Canadian HYBrid | Big Rock vs. Solar Alliance Energy | Big Rock vs. PHN Multi Style All Cap | Big Rock vs. EcoSynthetix |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |