Correlation Between Coastal Caribbean and North European
Can any of the company-specific risk be diversified away by investing in both Coastal Caribbean and North European 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 Coastal Caribbean and North European into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coastal Caribbean Oils and North European Oil, you can compare the effects of market volatilities on Coastal Caribbean and North European 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 Coastal Caribbean with a short position of North European. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coastal Caribbean and North European.
Diversification Opportunities for Coastal Caribbean and North European
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Coastal and North is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Coastal Caribbean Oils and North European Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North European Oil and Coastal Caribbean 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 Coastal Caribbean Oils are associated (or correlated) with North European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North European Oil has no effect on the direction of Coastal Caribbean i.e., Coastal Caribbean and North European go up and down completely randomly.
Pair Corralation between Coastal Caribbean and North European
Assuming the 90 days horizon Coastal Caribbean Oils is expected to generate 25.67 times more return on investment than North European. However, Coastal Caribbean is 25.67 times more volatile than North European Oil. It trades about 0.1 of its potential returns per unit of risk. North European Oil is currently generating about -0.03 per unit of risk. If you would invest 0.00 in Coastal Caribbean Oils on November 2, 2024 and sell it today you would earn a total of 0.01 from holding Coastal Caribbean Oils or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 22.47% |
| Values | Daily Returns |
Coastal Caribbean Oils vs. North European Oil
Performance |
| Timeline |
| Coastal Caribbean Oils |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| North European Oil |
Coastal Caribbean and North European Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coastal Caribbean and North European
The main advantage of trading using opposite Coastal Caribbean and North European positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coastal Caribbean position performs unexpectedly, North European 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 North European will offset losses from the drop in North European's long position.| Coastal Caribbean vs. Strat Petroleum | Coastal Caribbean vs. Imperial Res | Coastal Caribbean vs. Century Petroleum Corp |
| North European vs. Cross Timbers Royalty | North European vs. VOC Energy Trust | North European vs. Sabine Royalty Trust | North European vs. Permianville Royalty Trust |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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