Correlation Between 88 Energy and Brixton Metals
Can any of the company-specific risk be diversified away by investing in both 88 Energy and Brixton Metals 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 88 Energy and Brixton Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 88 Energy Limited and Brixton Metals, you can compare the effects of market volatilities on 88 Energy and Brixton Metals 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 88 Energy with a short position of Brixton Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of 88 Energy and Brixton Metals.
Diversification Opportunities for 88 Energy and Brixton Metals
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between EEENF and Brixton is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding 88 Energy Limited and Brixton Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brixton Metals and 88 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 88 Energy Limited are associated (or correlated) with Brixton Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brixton Metals has no effect on the direction of 88 Energy i.e., 88 Energy and Brixton Metals go up and down completely randomly.
Pair Corralation between 88 Energy and Brixton Metals
Assuming the 90 days horizon 88 Energy Limited is expected to generate 2.02 times more return on investment than Brixton Metals. However, 88 Energy is 2.02 times more volatile than Brixton Metals. It trades about -0.07 of its potential returns per unit of risk. Brixton Metals is currently generating about -0.32 per unit of risk. If you would invest 0.14 in 88 Energy Limited on September 1, 2024 and sell it today you would lose (0.02) from holding 88 Energy Limited or give up 14.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
88 Energy Limited vs. Brixton Metals
Performance |
| Timeline |
| 88 Energy Limited |
| Brixton Metals |
88 Energy and Brixton Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 88 Energy and Brixton Metals
The main advantage of trading using opposite 88 Energy and Brixton Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 88 Energy position performs unexpectedly, Brixton Metals 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 Brixton Metals will offset losses from the drop in Brixton Metals' long position.| 88 Energy vs. Invictus Energy Limited | 88 Energy vs. Sintana Energy | 88 Energy vs. Journey Energy | 88 Energy vs. Trillion Energy International |
| Brixton Metals vs. Cartier Iron Corp | Brixton Metals vs. Condor Resources | Brixton Metals vs. Monumental Minerals Corp | Brixton Metals vs. Western Alaska Minerals |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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