Correlation Between CN Energy and REX American
Can any of the company-specific risk be diversified away by investing in both CN Energy and REX American 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 CN Energy and REX American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CN Energy Group and REX American Resources, you can compare the effects of market volatilities on CN Energy and REX American 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 CN Energy with a short position of REX American. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN Energy and REX American.
Diversification Opportunities for CN Energy and REX American
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between CNEY and REX is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding CN Energy Group and REX American Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REX American Resources and CN 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 CN Energy Group are associated (or correlated) with REX American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REX American Resources has no effect on the direction of CN Energy i.e., CN Energy and REX American go up and down completely randomly.
Pair Corralation between CN Energy and REX American
Given the investment horizon of 90 days CN Energy Group is expected to generate 16.42 times more return on investment than REX American. However, CN Energy is 16.42 times more volatile than REX American Resources. It trades about 0.06 of its potential returns per unit of risk. REX American Resources is currently generating about -0.03 per unit of risk. If you would invest 56.00 in CN Energy Group on August 28, 2024 and sell it today you would lose (22.00) from holding CN Energy Group or give up 39.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CN Energy Group vs. REX American Resources
Performance |
| Timeline |
| CN Energy Group |
| REX American Resources |
CN Energy and REX American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN Energy and REX American
The main advantage of trading using opposite CN Energy and REX American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN Energy position performs unexpectedly, REX American 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 REX American will offset losses from the drop in REX American's long position.| CN Energy vs. Orion Engineered Carbons | CN Energy vs. Cabot | CN Energy vs. Minerals Technologies | CN Energy vs. Quaker Chemical |
| REX American vs. Innospec | REX American vs. H B Fuller | REX American vs. Quaker Chemical | REX American vs. Minerals Technologies |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |