Correlation Between CGX Energy and Desert Mountain
Can any of the company-specific risk be diversified away by investing in both CGX Energy and Desert Mountain 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 CGX Energy and Desert Mountain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CGX Energy and Desert Mountain Energy, you can compare the effects of market volatilities on CGX Energy and Desert Mountain 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 CGX Energy with a short position of Desert Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of CGX Energy and Desert Mountain.
Diversification Opportunities for CGX Energy and Desert Mountain
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CGX and Desert is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding CGX Energy and Desert Mountain Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desert Mountain Energy and CGX 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 CGX Energy are associated (or correlated) with Desert Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desert Mountain Energy has no effect on the direction of CGX Energy i.e., CGX Energy and Desert Mountain go up and down completely randomly.
Pair Corralation between CGX Energy and Desert Mountain
Assuming the 90 days horizon CGX Energy is expected to under-perform the Desert Mountain. But the pink sheet apears to be less risky and, when comparing its historical volatility, CGX Energy is 1.08 times less risky than Desert Mountain. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Desert Mountain Energy is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 88.00 in Desert Mountain Energy on September 2, 2024 and sell it today you would lose (67.00) from holding Desert Mountain Energy or give up 76.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CGX Energy vs. Desert Mountain Energy
Performance |
| Timeline |
| CGX Energy |
| Desert Mountain Energy |
CGX Energy and Desert Mountain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CGX Energy and Desert Mountain
The main advantage of trading using opposite CGX Energy and Desert Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CGX Energy position performs unexpectedly, Desert Mountain 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 Desert Mountain will offset losses from the drop in Desert Mountain's long position.| CGX Energy vs. Petroleo Brasileiro Petrobras | CGX Energy vs. Equinor ASA ADR | CGX Energy vs. Eni SpA ADR | CGX Energy vs. YPF Sociedad Anonima |
| Desert Mountain vs. Avanti Energy | Desert Mountain vs. CGX Energy | Desert Mountain vs. Royal Helium | Desert Mountain vs. Eco Oil Gas |
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.
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