Correlation Between Ngx Energy and Tullow Oil
Can any of the company-specific risk be diversified away by investing in both Ngx Energy and Tullow Oil 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 Ngx Energy and Tullow Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ngx Energy International and Tullow Oil plc, you can compare the effects of market volatilities on Ngx Energy and Tullow Oil 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 Ngx Energy with a short position of Tullow Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ngx Energy and Tullow Oil.
Diversification Opportunities for Ngx Energy and Tullow Oil
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ngx and Tullow is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ngx Energy International and Tullow Oil plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tullow Oil plc and Ngx 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 Ngx Energy International are associated (or correlated) with Tullow Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tullow Oil plc has no effect on the direction of Ngx Energy i.e., Ngx Energy and Tullow Oil go up and down completely randomly.
Pair Corralation between Ngx Energy and Tullow Oil
Assuming the 90 days horizon Ngx Energy International is expected to generate 0.72 times more return on investment than Tullow Oil. However, Ngx Energy International is 1.38 times less risky than Tullow Oil. It trades about 0.0 of its potential returns per unit of risk. Tullow Oil plc is currently generating about -0.03 per unit of risk. If you would invest 75.00 in Ngx Energy International on August 26, 2024 and sell it today you would lose (8.00) from holding Ngx Energy International or give up 10.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ngx Energy International vs. Tullow Oil plc
Performance |
| Timeline |
| Ngx Energy International |
| Tullow Oil plc |
Ngx Energy and Tullow Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ngx Energy and Tullow Oil
The main advantage of trading using opposite Ngx Energy and Tullow Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ngx Energy position performs unexpectedly, Tullow Oil 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 Tullow Oil will offset losses from the drop in Tullow Oil's long position.| Ngx Energy vs. Trillion Energy International | Ngx Energy vs. Bengal Energy | Ngx Energy vs. ROK Resources | Ngx Energy vs. Pieridae Energy Limited |
| Tullow Oil vs. Dno ASA | Tullow Oil vs. PetroShale | Tullow Oil vs. Horizon Oil Limited | Tullow Oil vs. Enwell Energy plc |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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