Correlation Between Energy Resources and Finexia Financial
Can any of the company-specific risk be diversified away by investing in both Energy Resources and Finexia Financial 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 Resources and Finexia Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Resources and Finexia Financial Group, you can compare the effects of market volatilities on Energy Resources and Finexia Financial 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 Resources with a short position of Finexia Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Resources and Finexia Financial.
Diversification Opportunities for Energy Resources and Finexia Financial
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Energy and Finexia is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Energy Resources and Finexia Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finexia Financial and Energy Resources 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 Resources are associated (or correlated) with Finexia Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finexia Financial has no effect on the direction of Energy Resources i.e., Energy Resources and Finexia Financial go up and down completely randomly.
Pair Corralation between Energy Resources and Finexia Financial
Assuming the 90 days trading horizon Energy Resources is expected to generate 2.68 times more return on investment than Finexia Financial. However, Energy Resources is 2.68 times more volatile than Finexia Financial Group. It trades about 0.01 of its potential returns per unit of risk. Finexia Financial Group is currently generating about 0.02 per unit of risk. If you would invest 5.39 in Energy Resources on August 31, 2024 and sell it today you would lose (5.09) from holding Energy Resources or give up 94.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Energy Resources vs. Finexia Financial Group
Performance |
| Timeline |
| Energy Resources |
| Finexia Financial |
Energy Resources and Finexia Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Resources and Finexia Financial
The main advantage of trading using opposite Energy Resources and Finexia Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Resources position performs unexpectedly, Finexia Financial 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 Finexia Financial will offset losses from the drop in Finexia Financial's long position.| Energy Resources vs. AiMedia Technologies | Energy Resources vs. Infomedia | Energy Resources vs. Argo Investments | Energy Resources vs. Collins Foods |
| Finexia Financial vs. Energy Resources | Finexia Financial vs. 88 Energy | Finexia Financial vs. Amani Gold | Finexia Financial vs. A1 Investments Resources |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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