Correlation Between Gear Energy and Journey Energy
Can any of the company-specific risk be diversified away by investing in both Gear Energy and Journey 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 Journey 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 Journey Energy, you can compare the effects of market volatilities on Gear Energy and Journey 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 Journey Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gear Energy and Journey Energy.
Diversification Opportunities for Gear Energy and Journey Energy
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gear and Journey is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Gear Energy and Journey Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Journey 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 Journey Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Journey Energy has no effect on the direction of Gear Energy i.e., Gear Energy and Journey Energy go up and down completely randomly.
Pair Corralation between Gear Energy and Journey Energy
Assuming the 90 days trading horizon Gear Energy is expected to generate 0.89 times more return on investment than Journey Energy. However, Gear Energy is 1.13 times less risky than Journey Energy. It trades about -0.04 of its potential returns per unit of risk. Journey Energy is currently generating about -0.08 per unit of risk. If you would invest 85.00 in Gear Energy on September 2, 2024 and sell it today you would lose (31.00) from holding Gear Energy or give up 36.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gear Energy vs. Journey Energy
Performance |
| Timeline |
| Gear Energy |
| Journey Energy |
Gear Energy and Journey Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gear Energy and Journey Energy
The main advantage of trading using opposite Gear Energy and Journey Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gear Energy position performs unexpectedly, Journey 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 Journey Energy will offset losses from the drop in Journey Energy's long position.| Gear Energy vs. Cardinal Energy | Gear Energy vs. Tamarack Valley Energy | Gear Energy vs. Athabasca Oil Corp | Gear Energy vs. Headwater Exploration |
| Journey Energy vs. Gear Energy | Journey Energy vs. InPlay Oil Corp | Journey Energy vs. Headwater Exploration | Journey Energy vs. Cardinal Energy |
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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