Correlation Between Group 6 and 88 Energy
Can any of the company-specific risk be diversified away by investing in both Group 6 and 88 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 Group 6 and 88 Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Group 6 Metals and 88 Energy, you can compare the effects of market volatilities on Group 6 and 88 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 Group 6 with a short position of 88 Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Group 6 and 88 Energy.
Diversification Opportunities for Group 6 and 88 Energy
Significant diversification
The 3 months correlation between Group and 88E is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Group 6 Metals and 88 Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 88 Energy and Group 6 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 Group 6 Metals are associated (or correlated) with 88 Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 88 Energy has no effect on the direction of Group 6 i.e., Group 6 and 88 Energy go up and down completely randomly.
Pair Corralation between Group 6 and 88 Energy
Assuming the 90 days trading horizon Group 6 Metals is expected to under-perform the 88 Energy. But the stock apears to be less risky and, when comparing its historical volatility, Group 6 Metals is 3.21 times less risky than 88 Energy. The stock trades about -0.05 of its potential returns per unit of risk. The 88 Energy is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 0.65 in 88 Energy on September 12, 2024 and sell it today you would lose (0.55) from holding 88 Energy or give up 84.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.7% |
| Values | Daily Returns |
Group 6 Metals vs. 88 Energy
Performance |
| Timeline |
| Group 6 Metals |
| 88 Energy |
Group 6 and 88 Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Group 6 and 88 Energy
The main advantage of trading using opposite Group 6 and 88 Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Group 6 position performs unexpectedly, 88 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 88 Energy will offset losses from the drop in 88 Energy's long position.| Group 6 vs. EVE Health Group | Group 6 vs. Srj Technologies Group | Group 6 vs. Capitol Health | Group 6 vs. RLF AgTech |
| 88 Energy vs. Duxton Broadacre Farms | 88 Energy vs. Aeon Metals | 88 Energy vs. DY6 Metals | 88 Energy vs. Group 6 Metals |
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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