Correlation Between Lucero Energy and Gear Energy
Can any of the company-specific risk be diversified away by investing in both Lucero 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 Lucero 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 Lucero Energy Corp and Gear Energy, you can compare the effects of market volatilities on Lucero 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 Lucero Energy with a short position of Gear Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucero Energy and Gear Energy.
Diversification Opportunities for Lucero Energy and Gear Energy
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lucero and Gear is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Lucero Energy Corp and Gear Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gear Energy and Lucero 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 Lucero Energy Corp 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 Lucero Energy i.e., Lucero Energy and Gear Energy go up and down completely randomly.
Pair Corralation between Lucero Energy and Gear Energy
Assuming the 90 days horizon Lucero Energy Corp is expected to generate 0.8 times more return on investment than Gear Energy. However, Lucero Energy Corp is 1.24 times less risky than Gear Energy. It trades about 0.26 of its potential returns per unit of risk. Gear Energy is currently generating about -0.01 per unit of risk. If you would invest 41.00 in Lucero Energy Corp on September 12, 2024 and sell it today you would earn a total of 6.00 from holding Lucero Energy Corp or generate 14.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lucero Energy Corp vs. Gear Energy
Performance |
| Timeline |
| Lucero Energy Corp |
| Gear Energy |
Lucero Energy and Gear Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lucero Energy and Gear Energy
The main advantage of trading using opposite Lucero Energy and Gear Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lucero 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.| Lucero Energy vs. Headwater Exploration | Lucero Energy vs. Gear Energy | Lucero Energy vs. Pine Cliff Energy | Lucero Energy vs. Rubellite Energy |
| Gear Energy vs. Cardinal Energy | Gear Energy vs. Tamarack Valley Energy | Gear Energy vs. Athabasca Oil Corp | Gear Energy vs. Headwater Exploration |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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