Correlation Between Energy Services and Argan
Can any of the company-specific risk be diversified away by investing in both Energy Services and Argan 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 Services and Argan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Services and Argan Inc, you can compare the effects of market volatilities on Energy Services and Argan 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 Services with a short position of Argan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Services and Argan.
Diversification Opportunities for Energy Services and Argan
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Energy and Argan is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Energy Services and Argan Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argan Inc and Energy Services 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 Services are associated (or correlated) with Argan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argan Inc has no effect on the direction of Energy Services i.e., Energy Services and Argan go up and down completely randomly.
Pair Corralation between Energy Services and Argan
Given the investment horizon of 90 days Energy Services is expected to generate 1.84 times more return on investment than Argan. However, Energy Services is 1.84 times more volatile than Argan Inc. It trades about 0.1 of its potential returns per unit of risk. Argan Inc is currently generating about 0.13 per unit of risk. If you would invest 247.00 in Energy Services on August 28, 2024 and sell it today you would earn a total of 1,296 from holding Energy Services or generate 524.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Services vs. Argan Inc
Performance |
| Timeline |
| Energy Services |
| Argan Inc |
Energy Services and Argan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Services and Argan
The main advantage of trading using opposite Energy Services and Argan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Services position performs unexpectedly, Argan 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 Argan will offset losses from the drop in Argan's long position.| Energy Services vs. Bouygues SA | Energy Services vs. NV5 Global | Energy Services vs. Matrix Service Co | Energy Services vs. MYR Group |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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