Correlation Between FAR and Crew Energy
Can any of the company-specific risk be diversified away by investing in both FAR and Crew Energy 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 FAR and Crew Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FAR Limited and Crew Energy, you can compare the effects of market volatilities on FAR and Crew Energy 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 FAR with a short position of Crew Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAR and Crew Energy.
Diversification Opportunities for FAR and Crew Energy
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between FAR and Crew is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding FAR Limited and Crew Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crew Energy and FAR 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 FAR Limited are associated (or correlated) with Crew Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crew Energy has no effect on the direction of FAR i.e., FAR and Crew Energy go up and down completely randomly.
Pair Corralation between FAR and Crew Energy
Assuming the 90 days horizon FAR is expected to generate 1.28 times less return on investment than Crew Energy. But when comparing it to its historical volatility, FAR Limited is 1.32 times less risky than Crew Energy. It trades about 0.03 of its potential returns per unit of risk. Crew Energy is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 412.00 in Crew Energy on September 2, 2024 and sell it today you would earn a total of 139.00 from holding Crew Energy or generate 33.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.94% |
| Values | Daily Returns |
FAR Limited vs. Crew Energy
Performance |
| Timeline |
| FAR Limited |
| Crew Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
FAR and Crew Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAR and Crew Energy
The main advantage of trading using opposite FAR and Crew Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAR position performs unexpectedly, Crew Energy 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 Crew Energy will offset losses from the drop in Crew Energy's long position.The idea behind FAR Limited and Crew Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Crew Energy vs. Surge Energy | Crew Energy vs. Athabasca Oil Corp | Crew Energy vs. Birchcliff Energy | Crew Energy vs. Tamarack Valley 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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