Correlation Between Expand Energy and Premium Brands
Can any of the company-specific risk be diversified away by investing in both Expand Energy and Premium Brands 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 Expand Energy and Premium Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Expand Energy and Premium Brands Holdings, you can compare the effects of market volatilities on Expand Energy and Premium Brands 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 Expand Energy with a short position of Premium Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Expand Energy and Premium Brands.
Diversification Opportunities for Expand Energy and Premium Brands
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Expand and Premium is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Expand Energy and Premium Brands Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premium Brands Holdings and Expand Energy 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 Expand Energy are associated (or correlated) with Premium Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premium Brands Holdings has no effect on the direction of Expand Energy i.e., Expand Energy and Premium Brands go up and down completely randomly.
Pair Corralation between Expand Energy and Premium Brands
Assuming the 90 days horizon Expand Energy is expected to generate 1.56 times more return on investment than Premium Brands. However, Expand Energy is 1.56 times more volatile than Premium Brands Holdings. It trades about 0.27 of its potential returns per unit of risk. Premium Brands Holdings is currently generating about -0.1 per unit of risk. If you would invest 8,963 in Expand Energy on November 3, 2024 and sell it today you would earn a total of 937.00 from holding Expand Energy or generate 10.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Expand Energy vs. Premium Brands Holdings
Performance |
| Timeline |
| Expand Energy |
| Premium Brands Holdings |
Expand Energy and Premium Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Expand Energy and Premium Brands
The main advantage of trading using opposite Expand Energy and Premium Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Expand Energy position performs unexpectedly, Premium Brands 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 Premium Brands will offset losses from the drop in Premium Brands' long position.| Expand Energy vs. BRP Inc | Expand Energy vs. Life Time Group | Expand Energy vs. Pintec Technology Holdings | Expand Energy vs. Nasdaq Inc |
| Premium Brands vs. Maple Leaf Foods | Premium Brands vs. Power of | Premium Brands vs. The North West | Premium Brands vs. Badger Infrastructure Solutions |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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