Correlation Between Gear Energy and Cardinal Energy
Can any of the company-specific risk be diversified away by investing in both Gear Energy and Cardinal 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 Gear Energy and Cardinal Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gear Energy and Cardinal Energy, you can compare the effects of market volatilities on Gear Energy and Cardinal 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 Gear Energy with a short position of Cardinal Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gear Energy and Cardinal Energy.
Diversification Opportunities for Gear Energy and Cardinal Energy
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gear and Cardinal is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Gear Energy and Cardinal Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Energy and Gear 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 Gear Energy are associated (or correlated) with Cardinal Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Energy has no effect on the direction of Gear Energy i.e., Gear Energy and Cardinal Energy go up and down completely randomly.
Pair Corralation between Gear Energy and Cardinal Energy
Assuming the 90 days horizon Gear Energy is expected to under-perform the Cardinal Energy. In addition to that, Gear Energy is 1.56 times more volatile than Cardinal Energy. It trades about -0.02 of its total potential returns per unit of risk. Cardinal Energy is currently generating about 0.01 per unit of volatility. If you would invest 448.00 in Cardinal Energy on August 29, 2024 and sell it today you would earn a total of 23.00 from holding Cardinal Energy or generate 5.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Gear Energy vs. Cardinal Energy
Performance |
| Timeline |
| Gear Energy |
| Cardinal Energy |
Gear Energy and Cardinal Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gear Energy and Cardinal Energy
The main advantage of trading using opposite Gear Energy and Cardinal Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gear Energy position performs unexpectedly, Cardinal 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 Cardinal Energy will offset losses from the drop in Cardinal Energy's long position.| Gear Energy vs. Petroleo Brasileiro Petrobras | Gear Energy vs. Equinor ASA ADR | Gear Energy vs. Eni SpA ADR | Gear Energy vs. YPF Sociedad Anonima |
| Cardinal Energy vs. Petroleo Brasileiro Petrobras | Cardinal Energy vs. Equinor ASA ADR | Cardinal Energy vs. Eni SpA ADR | Cardinal Energy vs. YPF Sociedad Anonima |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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