Correlation Between Energy Absolute and Bound
Can any of the company-specific risk be diversified away by investing in both Energy Absolute and Bound 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 Energy Absolute and Bound into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Absolute Public and Bound and Beyond, you can compare the effects of market volatilities on Energy Absolute and Bound 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 Energy Absolute with a short position of Bound. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Absolute and Bound.
Diversification Opportunities for Energy Absolute and Bound
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Energy and Bound is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Energy Absolute Public and Bound and Beyond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bound and Beyond and Energy Absolute 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 Energy Absolute Public are associated (or correlated) with Bound. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bound and Beyond has no effect on the direction of Energy Absolute i.e., Energy Absolute and Bound go up and down completely randomly.
Pair Corralation between Energy Absolute and Bound
Assuming the 90 days horizon Energy Absolute Public is expected to under-perform the Bound. In addition to that, Energy Absolute is 3.3 times more volatile than Bound and Beyond. It trades about -0.16 of its total potential returns per unit of risk. Bound and Beyond is currently generating about -0.04 per unit of volatility. If you would invest 905.00 in Bound and Beyond on September 1, 2024 and sell it today you would lose (15.00) from holding Bound and Beyond or give up 1.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Energy Absolute Public vs. Bound and Beyond
Performance |
| Timeline |
| Energy Absolute Public |
| Bound and Beyond |
Energy Absolute and Bound Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Absolute and Bound
The main advantage of trading using opposite Energy Absolute and Bound positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Absolute position performs unexpectedly, Bound 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 Bound will offset losses from the drop in Bound's long position.| Energy Absolute vs. Gulf Energy Development | Energy Absolute vs. Global Power Synergy | Energy Absolute vs. CP ALL Public | Energy Absolute vs. Bangkok Dusit Medical |
| Bound vs. BCPG Public | Bound vs. Aqua Public | Bound vs. Energy Absolute Public | Bound vs. Bangkok Aviation Fuel |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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