Correlation Between Expand Energy and Flex
Can any of the company-specific risk be diversified away by investing in both Expand Energy and Flex 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 Flex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Expand Energy and Flex, you can compare the effects of market volatilities on Expand Energy and Flex 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 Flex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Expand Energy and Flex.
Diversification Opportunities for Expand Energy and Flex
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Expand and Flex is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Expand Energy and Flex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flex 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 Flex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flex has no effect on the direction of Expand Energy i.e., Expand Energy and Flex go up and down completely randomly.
Pair Corralation between Expand Energy and Flex
Assuming the 90 days horizon Expand Energy is expected to generate 1.46 times more return on investment than Flex. However, Expand Energy is 1.46 times more volatile than Flex. It trades about 0.21 of its potential returns per unit of risk. Flex is currently generating about -0.05 per unit of risk. If you would invest 7,473 in Expand Energy on September 12, 2024 and sell it today you would earn a total of 1,049 from holding Expand Energy or generate 14.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Expand Energy vs. Flex
Performance |
| Timeline |
| Expand Energy |
| Flex |
Expand Energy and Flex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Expand Energy and Flex
The main advantage of trading using opposite Expand Energy and Flex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Expand Energy position performs unexpectedly, Flex 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 Flex will offset losses from the drop in Flex's long position.| Expand Energy vs. Antero Resources Corp | Expand Energy vs. Empire Petroleum Corp | Expand Energy vs. Permian Resources | Expand Energy vs. SandRidge Energy |
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 Stocks Directory module to find actively traded stocks across global markets.
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