Correlation Between Invictus Energy and Obayashi
Can any of the company-specific risk be diversified away by investing in both Invictus Energy and Obayashi 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 Obayashi 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 Obayashi, you can compare the effects of market volatilities on Invictus Energy and Obayashi 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 Obayashi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invictus Energy and Obayashi.
Diversification Opportunities for Invictus Energy and Obayashi
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Invictus and Obayashi is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Invictus Energy Limited and Obayashi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Obayashi 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 Obayashi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Obayashi has no effect on the direction of Invictus Energy i.e., Invictus Energy and Obayashi go up and down completely randomly.
Pair Corralation between Invictus Energy and Obayashi
Assuming the 90 days horizon Invictus Energy Limited is expected to generate 7.04 times more return on investment than Obayashi. However, Invictus Energy is 7.04 times more volatile than Obayashi. It trades about 0.21 of its potential returns per unit of risk. Obayashi is currently generating about -0.21 per unit of risk. If you would invest 3.69 in Invictus Energy Limited on September 28, 2024 and sell it today you would earn a total of 1.31 from holding Invictus Energy Limited or generate 35.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Invictus Energy Limited vs. Obayashi
Performance |
| Timeline |
| Invictus Energy |
| Obayashi |
Invictus Energy and Obayashi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invictus Energy and Obayashi
The main advantage of trading using opposite Invictus Energy and Obayashi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invictus Energy position performs unexpectedly, Obayashi 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 Obayashi will offset losses from the drop in Obayashi's long position.| Invictus Energy vs. Liberty Energy Corp | Invictus Energy vs. West Canyon Energy | Invictus Energy vs. Santa Fe Petroleum |
| Obayashi vs. Watsco Inc | Obayashi vs. Fastenal Company | Obayashi vs. SiteOne Landscape Supply | Obayashi vs. Ferguson Plc |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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