Correlation Between Houston Natural and Maverick Energy
Can any of the company-specific risk be diversified away by investing in both Houston Natural and Maverick 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 Houston Natural and Maverick Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Houston Natural Resources and Maverick Energy Group, you can compare the effects of market volatilities on Houston Natural and Maverick 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 Houston Natural with a short position of Maverick Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Houston Natural and Maverick Energy.
Diversification Opportunities for Houston Natural and Maverick Energy
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Houston and Maverick is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Houston Natural Resources and Maverick Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maverick Energy Group and Houston Natural 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 Houston Natural Resources are associated (or correlated) with Maverick Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maverick Energy Group has no effect on the direction of Houston Natural i.e., Houston Natural and Maverick Energy go up and down completely randomly.
Pair Corralation between Houston Natural and Maverick Energy
Given the investment horizon of 90 days Houston Natural Resources is expected to under-perform the Maverick Energy. In addition to that, Houston Natural is 1.15 times more volatile than Maverick Energy Group. It trades about -0.11 of its total potential returns per unit of risk. Maverick Energy Group is currently generating about 0.05 per unit of volatility. If you would invest 0.67 in Maverick Energy Group on November 3, 2024 and sell it today you would earn a total of 0.01 from holding Maverick Energy Group or generate 1.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 81.82% |
| Values | Daily Returns |
Houston Natural Resources vs. Maverick Energy Group
Performance |
| Timeline |
| Houston Natural Resources |
| Maverick Energy Group |
Houston Natural and Maverick Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Houston Natural and Maverick Energy
The main advantage of trading using opposite Houston Natural and Maverick Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Houston Natural position performs unexpectedly, Maverick 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 Maverick Energy will offset losses from the drop in Maverick Energy's long position.| Houston Natural vs. Dear Cashmere Holding | Houston Natural vs. Wialan Technologies | Houston Natural vs. Global Develpmts | Houston Natural vs. Clean Vision Corp |
| Maverick Energy vs. Gulf Keystone Petroleum | Maverick Energy vs. Falcon Oil Gas | Maverick Energy vs. North European Oil | Maverick Energy vs. SandRidge 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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