Correlation Between Energy Resources and Premier Investments
Can any of the company-specific risk be diversified away by investing in both Energy Resources and Premier Investments 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 Premier Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Resources and Premier Investments, you can compare the effects of market volatilities on Energy Resources and Premier Investments 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 Premier Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Resources and Premier Investments.
Diversification Opportunities for Energy Resources and Premier Investments
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Energy and Premier is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Energy Resources and Premier Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Investments 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 Premier Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Investments has no effect on the direction of Energy Resources i.e., Energy Resources and Premier Investments go up and down completely randomly.
Pair Corralation between Energy Resources and Premier Investments
Assuming the 90 days trading horizon Energy Resources is expected to generate 22.34 times more return on investment than Premier Investments. However, Energy Resources is 22.34 times more volatile than Premier Investments. It trades about 0.13 of its potential returns per unit of risk. Premier Investments is currently generating about 0.21 per unit of risk. If you would invest 0.30 in Energy Resources on September 5, 2024 and sell it today you would earn a total of 0.00 from holding Energy Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Energy Resources vs. Premier Investments
Performance |
| Timeline |
| Energy Resources |
| Premier Investments |
Energy Resources and Premier Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Resources and Premier Investments
The main advantage of trading using opposite Energy Resources and Premier Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Resources position performs unexpectedly, Premier Investments 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 Premier Investments will offset losses from the drop in Premier Investments' long position.| Energy Resources vs. Westpac Banking | Energy Resources vs. ABACUS STORAGE KING | Energy Resources vs. Odyssey Energy | Energy Resources vs. Bisalloy Steel Group |
| Premier Investments vs. Energy Resources | Premier Investments vs. 88 Energy | Premier Investments vs. Amani Gold | Premier Investments 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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