Correlation Between Frontera Energy and Journey Energy
Can any of the company-specific risk be diversified away by investing in both Frontera Energy and Journey 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 Frontera Energy and Journey Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frontera Energy Corp and Journey Energy, you can compare the effects of market volatilities on Frontera Energy and Journey 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 Frontera Energy with a short position of Journey Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontera Energy and Journey Energy.
Diversification Opportunities for Frontera Energy and Journey Energy
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Frontera and Journey is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Frontera Energy Corp and Journey Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Journey Energy and Frontera 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 Frontera Energy Corp are associated (or correlated) with Journey Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Journey Energy has no effect on the direction of Frontera Energy i.e., Frontera Energy and Journey Energy go up and down completely randomly.
Pair Corralation between Frontera Energy and Journey Energy
Assuming the 90 days trading horizon Frontera Energy Corp is expected to generate 0.7 times more return on investment than Journey Energy. However, Frontera Energy Corp is 1.44 times less risky than Journey Energy. It trades about -0.26 of its potential returns per unit of risk. Journey Energy is currently generating about -0.25 per unit of risk. If you would invest 814.00 in Frontera Energy Corp on November 28, 2024 and sell it today you would lose (85.00) from holding Frontera Energy Corp or give up 10.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Frontera Energy Corp vs. Journey Energy
Performance |
| Timeline |
| Frontera Energy Corp |
| Journey Energy |
Frontera Energy and Journey Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frontera Energy and Journey Energy
The main advantage of trading using opposite Frontera Energy and Journey Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontera Energy position performs unexpectedly, Journey 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 Journey Energy will offset losses from the drop in Journey Energy's long position.| Frontera Energy vs. CGX Energy | Frontera Energy vs. Parex Resources | Frontera Energy vs. Gran Tierra Energy | Frontera Energy vs. Secure Energy Services |
| Journey Energy vs. InPlay Oil Corp | Journey Energy vs. Headwater Exploration | Journey Energy vs. Cardinal Energy | Journey Energy vs. Pine Cliff 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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