Correlation Between FLEX LNG and Viper Energy
Can any of the company-specific risk be diversified away by investing in both FLEX LNG and Viper 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 FLEX LNG and Viper Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLEX LNG and Viper Energy Ut, you can compare the effects of market volatilities on FLEX LNG and Viper 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 FLEX LNG with a short position of Viper Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLEX LNG and Viper Energy.
Diversification Opportunities for FLEX LNG and Viper Energy
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FLEX and Viper is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding FLEX LNG and Viper Energy Ut in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viper Energy Ut and FLEX LNG 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 FLEX LNG are associated (or correlated) with Viper Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viper Energy Ut has no effect on the direction of FLEX LNG i.e., FLEX LNG and Viper Energy go up and down completely randomly.
Pair Corralation between FLEX LNG and Viper Energy
Given the investment horizon of 90 days FLEX LNG is expected to under-perform the Viper Energy. But the stock apears to be less risky and, when comparing its historical volatility, FLEX LNG is 1.18 times less risky than Viper Energy. The stock trades about -0.06 of its potential returns per unit of risk. The Viper Energy Ut is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4,589 in Viper Energy Ut on August 31, 2024 and sell it today you would earn a total of 805.00 from holding Viper Energy Ut or generate 17.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FLEX LNG vs. Viper Energy Ut
Performance |
| Timeline |
| FLEX LNG |
| Viper Energy Ut |
FLEX LNG and Viper Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FLEX LNG and Viper Energy
The main advantage of trading using opposite FLEX LNG and Viper Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLEX LNG position performs unexpectedly, Viper 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 Viper Energy will offset losses from the drop in Viper Energy's long position.| FLEX LNG vs. Frontline | FLEX LNG vs. Torm PLC Class | FLEX LNG vs. Navigator Holdings | FLEX LNG vs. Teekay Tankers |
| Viper Energy vs. Western Midstream Partners | Viper Energy vs. DT Midstream | Viper Energy vs. MPLX LP | Viper Energy vs. BP Prudhoe Bay |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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