Correlation Between Gear Energy and Lycos Energy
Can any of the company-specific risk be diversified away by investing in both Gear Energy and Lycos 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 Lycos 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 Lycos Energy, you can compare the effects of market volatilities on Gear Energy and Lycos 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 Lycos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gear Energy and Lycos Energy.
Diversification Opportunities for Gear Energy and Lycos Energy
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gear and Lycos is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Gear Energy and Lycos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lycos 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 Lycos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lycos Energy has no effect on the direction of Gear Energy i.e., Gear Energy and Lycos Energy go up and down completely randomly.
Pair Corralation between Gear Energy and Lycos Energy
Assuming the 90 days trading horizon Gear Energy is expected to generate 0.94 times more return on investment than Lycos Energy. However, Gear Energy is 1.06 times less risky than Lycos Energy. It trades about 0.04 of its potential returns per unit of risk. Lycos Energy is currently generating about -0.05 per unit of risk. If you would invest 50.00 in Gear Energy on September 14, 2024 and sell it today you would earn a total of 1.00 from holding Gear Energy or generate 2.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gear Energy vs. Lycos Energy
Performance |
| Timeline |
| Gear Energy |
| Lycos Energy |
Gear Energy and Lycos Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gear Energy and Lycos Energy
The main advantage of trading using opposite Gear Energy and Lycos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gear Energy position performs unexpectedly, Lycos 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 Lycos Energy will offset losses from the drop in Lycos 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 |
| Lycos Energy vs. Gear Energy | Lycos Energy vs. Journey Energy | Lycos Energy vs. Yangarra Resources | Lycos Energy vs. Obsidian 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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