Correlation Between Invictus Energy and Gear Energy
Can any of the company-specific risk be diversified away by investing in both Invictus Energy and Gear 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 Invictus Energy and Gear Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invictus Energy Limited and Gear Energy, you can compare the effects of market volatilities on Invictus Energy and Gear 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 Invictus Energy with a short position of Gear Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invictus Energy and Gear Energy.
Diversification Opportunities for Invictus Energy and Gear Energy
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invictus and Gear is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Invictus Energy Limited and Gear Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gear Energy and Invictus 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 Invictus Energy Limited are associated (or correlated) with Gear Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gear Energy has no effect on the direction of Invictus Energy i.e., Invictus Energy and Gear Energy go up and down completely randomly.
Pair Corralation between Invictus Energy and Gear Energy
Assuming the 90 days horizon Invictus Energy Limited is expected to generate 2.7 times more return on investment than Gear Energy. However, Invictus Energy is 2.7 times more volatile than Gear Energy. It trades about 0.03 of its potential returns per unit of risk. Gear Energy is currently generating about -0.09 per unit of risk. If you would invest 4.69 in Invictus Energy Limited on August 25, 2024 and sell it today you would earn a total of 0.01 from holding Invictus Energy Limited or generate 0.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Invictus Energy Limited vs. Gear Energy
Performance |
| Timeline |
| Invictus Energy |
| Gear Energy |
Invictus Energy and Gear Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invictus Energy and Gear Energy
The main advantage of trading using opposite Invictus Energy and Gear Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invictus Energy position performs unexpectedly, Gear 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 Gear Energy will offset losses from the drop in Gear Energy's long position.| Invictus Energy vs. Sintana Energy | Invictus Energy vs. 88 Energy Limited | Invictus Energy vs. Journey Energy | Invictus Energy vs. Trillion Energy International |
| Gear Energy vs. Tamarack Valley Energy | Gear Energy vs. MEG Energy Corp | Gear Energy vs. Cardinal Energy | Gear Energy vs. Whitecap Resources |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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