Correlation Between Gemz Corp and Xtra Energy
Can any of the company-specific risk be diversified away by investing in both Gemz Corp and Xtra 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 Gemz Corp and Xtra Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gemz Corp and Xtra Energy Corp, you can compare the effects of market volatilities on Gemz Corp and Xtra 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 Gemz Corp with a short position of Xtra Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gemz Corp and Xtra Energy.
Diversification Opportunities for Gemz Corp and Xtra Energy
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Gemz and Xtra is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Gemz Corp and Xtra Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtra Energy Corp and Gemz Corp 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 Gemz Corp are associated (or correlated) with Xtra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtra Energy Corp has no effect on the direction of Gemz Corp i.e., Gemz Corp and Xtra Energy go up and down completely randomly.
Pair Corralation between Gemz Corp and Xtra Energy
Given the investment horizon of 90 days Gemz Corp is expected to generate 2.31 times more return on investment than Xtra Energy. However, Gemz Corp is 2.31 times more volatile than Xtra Energy Corp. It trades about 0.09 of its potential returns per unit of risk. Xtra Energy Corp is currently generating about 0.04 per unit of risk. If you would invest 0.05 in Gemz Corp on August 30, 2024 and sell it today you would lose (0.01) from holding Gemz Corp or give up 20.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gemz Corp vs. Xtra Energy Corp
Performance |
| Timeline |
| Gemz Corp |
| Xtra Energy Corp |
Gemz Corp and Xtra Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gemz Corp and Xtra Energy
The main advantage of trading using opposite Gemz Corp and Xtra Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gemz Corp position performs unexpectedly, Xtra 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 Xtra Energy will offset losses from the drop in Xtra Energy's long position.| Gemz Corp vs. A1 Group | Gemz Corp vs. Xtra Energy Corp | Gemz Corp vs. Biopower Operations Corp | Gemz Corp vs. New Generation Consumer |
| Xtra Energy vs. XCana Petroleum | Xtra Energy vs. New Generation Consumer | Xtra Energy vs. Arsenal Digital Holdings | Xtra Energy vs. UHF Logistics Group |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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