Correlation Between Journey Energy and Prairie Provident
Can any of the company-specific risk be diversified away by investing in both Journey Energy and Prairie Provident 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 Journey Energy and Prairie Provident into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Journey Energy and Prairie Provident Resources, you can compare the effects of market volatilities on Journey Energy and Prairie Provident 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 Journey Energy with a short position of Prairie Provident. Check out your portfolio center. Please also check ongoing floating volatility patterns of Journey Energy and Prairie Provident.
Diversification Opportunities for Journey Energy and Prairie Provident
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Journey and Prairie is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Journey Energy and Prairie Provident Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prairie Provident and Journey 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 Journey Energy are associated (or correlated) with Prairie Provident. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prairie Provident has no effect on the direction of Journey Energy i.e., Journey Energy and Prairie Provident go up and down completely randomly.
Pair Corralation between Journey Energy and Prairie Provident
Assuming the 90 days trading horizon Journey Energy is expected to under-perform the Prairie Provident. But the stock apears to be less risky and, when comparing its historical volatility, Journey Energy is 4.86 times less risky than Prairie Provident. The stock trades about -0.01 of its potential returns per unit of risk. The Prairie Provident Resources is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2.50 in Prairie Provident Resources on September 4, 2024 and sell it today you would earn a total of 1.00 from holding Prairie Provident Resources or generate 40.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Journey Energy vs. Prairie Provident Resources
Performance |
| Timeline |
| Journey Energy |
| Prairie Provident |
Journey Energy and Prairie Provident Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Journey Energy and Prairie Provident
The main advantage of trading using opposite Journey Energy and Prairie Provident positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Journey Energy position performs unexpectedly, Prairie Provident 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 Prairie Provident will offset losses from the drop in Prairie Provident's long position.| Journey Energy vs. Gear Energy | Journey Energy vs. InPlay Oil Corp | Journey Energy vs. Headwater Exploration | Journey Energy vs. Cardinal Energy |
| Prairie Provident vs. Pine Cliff Energy | Prairie Provident vs. InPlay Oil Corp | Prairie Provident vs. Journey 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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