Correlation Between E Split and Paramount Resources
Can any of the company-specific risk be diversified away by investing in both E Split and Paramount Resources 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 Paramount Resources 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 Paramount Resources, you can compare the effects of market volatilities on E Split and Paramount Resources 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 Paramount Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Split and Paramount Resources.
Diversification Opportunities for E Split and Paramount Resources
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ENS-PA and Paramount is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding E Split Corp and Paramount Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paramount Resources 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 Paramount Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paramount Resources has no effect on the direction of E Split i.e., E Split and Paramount Resources go up and down completely randomly.
Pair Corralation between E Split and Paramount Resources
Assuming the 90 days trading horizon E Split Corp is expected to generate 0.23 times more return on investment than Paramount Resources. However, E Split Corp is 4.27 times less risky than Paramount Resources. It trades about 0.17 of its potential returns per unit of risk. Paramount Resources is currently generating about 0.01 per unit of risk. If you would invest 995.00 in E Split Corp on August 24, 2024 and sell it today you would earn a total of 110.00 from holding E Split Corp or generate 11.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
E Split Corp vs. Paramount Resources
Performance |
| Timeline |
| E Split Corp |
| Paramount Resources |
E Split and Paramount Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E Split and Paramount Resources
The main advantage of trading using opposite E Split and Paramount Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E Split position performs unexpectedly, Paramount Resources 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 Paramount Resources will offset losses from the drop in Paramount Resources' long position.| E Split vs. Enbridge Pref 11 | E Split vs. Enbridge Pref L | E Split vs. E Split Corp | E Split vs. Sage Potash Corp |
| Paramount Resources vs. Doman Building Materials | Paramount Resources vs. NeXGold Mining Corp | Paramount Resources vs. Cogeco Communications | Paramount Resources vs. Capstone Mining Corp |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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