Correlation Between Africa Energy and I3 Energy
Can any of the company-specific risk be diversified away by investing in both Africa Energy and I3 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 Africa Energy and I3 Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Africa Energy Corp and i3 Energy Plc, you can compare the effects of market volatilities on Africa Energy and I3 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 Africa Energy with a short position of I3 Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Africa Energy and I3 Energy.
Diversification Opportunities for Africa Energy and I3 Energy
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Africa and ITEEF is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Africa Energy Corp and i3 Energy Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on i3 Energy Plc and Africa 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 Africa Energy Corp are associated (or correlated) with I3 Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of i3 Energy Plc has no effect on the direction of Africa Energy i.e., Africa Energy and I3 Energy go up and down completely randomly.
Pair Corralation between Africa Energy and I3 Energy
Assuming the 90 days horizon Africa Energy Corp is expected to under-perform the I3 Energy. In addition to that, Africa Energy is 1.18 times more volatile than i3 Energy Plc. It trades about -0.02 of its total potential returns per unit of risk. i3 Energy Plc is currently generating about 0.02 per unit of volatility. If you would invest 21.00 in i3 Energy Plc on August 24, 2024 and sell it today you would lose (7.00) from holding i3 Energy Plc or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.38% |
| Values | Daily Returns |
Africa Energy Corp vs. i3 Energy Plc
Performance |
| Timeline |
| Africa Energy Corp |
| i3 Energy Plc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Africa Energy and I3 Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Africa Energy and I3 Energy
The main advantage of trading using opposite Africa Energy and I3 Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Africa Energy position performs unexpectedly, I3 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 I3 Energy will offset losses from the drop in I3 Energy's long position.| Africa Energy vs. Petroleo Brasileiro Petrobras | Africa Energy vs. Equinor ASA ADR | Africa Energy vs. Eni SpA ADR | Africa Energy vs. YPF Sociedad Anonima |
| I3 Energy vs. Permian Resources | I3 Energy vs. Devon Energy | I3 Energy vs. EOG Resources | I3 Energy vs. Coterra 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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