Correlation Between Falcon Energy and Conquest Resources
Can any of the company-specific risk be diversified away by investing in both Falcon Energy and Conquest Resources 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 Falcon Energy and Conquest Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Energy Materials and Conquest Resources, you can compare the effects of market volatilities on Falcon Energy and Conquest Resources 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 Falcon Energy with a short position of Conquest Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Energy and Conquest Resources.
Diversification Opportunities for Falcon Energy and Conquest Resources
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Falcon and Conquest is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Energy Materials and Conquest Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conquest Resources and Falcon 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 Falcon Energy Materials are associated (or correlated) with Conquest Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conquest Resources has no effect on the direction of Falcon Energy i.e., Falcon Energy and Conquest Resources go up and down completely randomly.
Pair Corralation between Falcon Energy and Conquest Resources
Assuming the 90 days trading horizon Falcon Energy is expected to generate 5.75 times less return on investment than Conquest Resources. But when comparing it to its historical volatility, Falcon Energy Materials is 2.77 times less risky than Conquest Resources. It trades about 0.03 of its potential returns per unit of risk. Conquest Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2.00 in Conquest Resources on September 14, 2024 and sell it today you would earn a total of 0.00 from holding Conquest Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Falcon Energy Materials vs. Conquest Resources
Performance |
| Timeline |
| Falcon Energy Materials |
| Conquest Resources |
Falcon Energy and Conquest Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Energy and Conquest Resources
The main advantage of trading using opposite Falcon Energy and Conquest Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Energy position performs unexpectedly, Conquest Resources 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 Conquest Resources will offset losses from the drop in Conquest Resources' long position.| Falcon Energy vs. Teck Resources Limited | Falcon Energy vs. Ivanhoe Mines | Falcon Energy vs. Filo Mining Corp | Falcon Energy vs. Calibre Mining Corp |
| Conquest Resources vs. Falcon Energy Materials | Conquest Resources vs. Oculus VisionTech | Conquest Resources vs. CVW CleanTech | Conquest Resources vs. Electra Battery Materials |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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