Correlation Between EnQuest PLC and Pine Cliff
Can any of the company-specific risk be diversified away by investing in both EnQuest PLC and Pine Cliff 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 EnQuest PLC and Pine Cliff into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EnQuest PLC and Pine Cliff Energy, you can compare the effects of market volatilities on EnQuest PLC and Pine Cliff 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 EnQuest PLC with a short position of Pine Cliff. Check out your portfolio center. Please also check ongoing floating volatility patterns of EnQuest PLC and Pine Cliff.
Diversification Opportunities for EnQuest PLC and Pine Cliff
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between EnQuest and Pine is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding EnQuest PLC and Pine Cliff Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pine Cliff Energy and EnQuest PLC 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 EnQuest PLC are associated (or correlated) with Pine Cliff. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pine Cliff Energy has no effect on the direction of EnQuest PLC i.e., EnQuest PLC and Pine Cliff go up and down completely randomly.
Pair Corralation between EnQuest PLC and Pine Cliff
Assuming the 90 days horizon EnQuest PLC is expected to generate 2.81 times less return on investment than Pine Cliff. In addition to that, EnQuest PLC is 1.22 times more volatile than Pine Cliff Energy. It trades about 0.02 of its total potential returns per unit of risk. Pine Cliff Energy is currently generating about 0.08 per unit of volatility. If you would invest 60.00 in Pine Cliff Energy on September 2, 2024 and sell it today you would earn a total of 3.00 from holding Pine Cliff Energy or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EnQuest PLC vs. Pine Cliff Energy
Performance |
| Timeline |
| EnQuest PLC |
| Pine Cliff Energy |
EnQuest PLC and Pine Cliff Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EnQuest PLC and Pine Cliff
The main advantage of trading using opposite EnQuest PLC and Pine Cliff positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EnQuest PLC position performs unexpectedly, Pine Cliff 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 Pine Cliff will offset losses from the drop in Pine Cliff's long position.| EnQuest PLC vs. ADX Energy | EnQuest PLC vs. Pine Cliff Energy | EnQuest PLC vs. AER Energy Resources | EnQuest PLC vs. Headwater Exploration |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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