Correlation Between E Split and Gear Energy
Can any of the company-specific risk be diversified away by investing in both E Split and Gear Energy 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 E Split and Gear Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between E Split Corp and Gear Energy, you can compare the effects of market volatilities on E Split and Gear Energy 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 E Split with a short position of Gear Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Split and Gear Energy.
Diversification Opportunities for E Split and Gear Energy
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ENS-PA and Gear is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding E Split Corp and Gear Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gear Energy and E Split 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 E Split Corp are associated (or correlated) with Gear Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gear Energy has no effect on the direction of E Split i.e., E Split and Gear Energy go up and down completely randomly.
Pair Corralation between E Split and Gear Energy
Assuming the 90 days trading horizon E Split Corp is expected to generate 0.17 times more return on investment than Gear Energy. However, E Split Corp is 5.72 times less risky than Gear Energy. It trades about 0.11 of its potential returns per unit of risk. Gear Energy is currently generating about -0.03 per unit of risk. If you would invest 874.00 in E Split Corp on August 25, 2024 and sell it today you would earn a total of 243.00 from holding E Split Corp or generate 27.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
E Split Corp vs. Gear Energy
Performance |
| Timeline |
| E Split Corp |
| Gear Energy |
E Split and Gear Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E Split and Gear Energy
The main advantage of trading using opposite E Split and Gear Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E Split position performs unexpectedly, Gear Energy 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 Gear Energy will offset losses from the drop in Gear Energy's long position.The idea behind E Split Corp and Gear Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Gear Energy vs. Cardinal Energy | Gear Energy vs. Tamarack Valley Energy | Gear Energy vs. Athabasca Oil Corp | Gear Energy vs. Headwater Exploration |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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