Correlation Between Journey Energy and Africa Oil
Can any of the company-specific risk be diversified away by investing in both Journey Energy and Africa Oil 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 Africa Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Journey Energy and Africa Oil Corp, you can compare the effects of market volatilities on Journey Energy and Africa Oil 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 Africa Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Journey Energy and Africa Oil.
Diversification Opportunities for Journey Energy and Africa Oil
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Journey and Africa is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Journey Energy and Africa Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Africa Oil Corp 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 Africa Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Africa Oil Corp has no effect on the direction of Journey Energy i.e., Journey Energy and Africa Oil go up and down completely randomly.
Pair Corralation between Journey Energy and Africa Oil
Assuming the 90 days horizon Journey Energy is expected to under-perform the Africa Oil. In addition to that, Journey Energy is 1.23 times more volatile than Africa Oil Corp. It trades about -0.09 of its total potential returns per unit of risk. Africa Oil Corp is currently generating about -0.04 per unit of volatility. If you would invest 214.00 in Africa Oil Corp on August 31, 2024 and sell it today you would lose (74.00) from holding Africa Oil Corp or give up 34.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Journey Energy vs. Africa Oil Corp
Performance |
| Timeline |
| Journey Energy |
| Africa Oil Corp |
Journey Energy and Africa Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Journey Energy and Africa Oil
The main advantage of trading using opposite Journey Energy and Africa Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Journey Energy position performs unexpectedly, Africa Oil 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 Africa Oil will offset losses from the drop in Africa Oil's long position.| Journey Energy vs. Frontera Energy Corp | Journey Energy vs. Eco Oil Gas | Journey Energy vs. Total Helium | Journey Energy vs. Avanti Energy |
| Africa Oil vs. Petroleo Brasileiro Petrobras | Africa Oil vs. Equinor ASA ADR | Africa Oil vs. Eni SpA ADR | Africa Oil vs. YPF Sociedad Anonima |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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