Correlation Between MEG Energy and Melbana Energy
Can any of the company-specific risk be diversified away by investing in both MEG Energy and Melbana 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 MEG Energy and Melbana Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MEG Energy Corp and Melbana Energy Limited, you can compare the effects of market volatilities on MEG Energy and Melbana 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 MEG Energy with a short position of Melbana Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of MEG Energy and Melbana Energy.
Diversification Opportunities for MEG Energy and Melbana Energy
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between MEG and Melbana is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding MEG Energy Corp and Melbana Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melbana Energy and MEG 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 MEG Energy Corp are associated (or correlated) with Melbana Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melbana Energy has no effect on the direction of MEG Energy i.e., MEG Energy and Melbana Energy go up and down completely randomly.
Pair Corralation between MEG Energy and Melbana Energy
Assuming the 90 days horizon MEG Energy Corp is expected to generate 0.32 times more return on investment than Melbana Energy. However, MEG Energy Corp is 3.09 times less risky than Melbana Energy. It trades about -0.05 of its potential returns per unit of risk. Melbana Energy Limited is currently generating about -0.09 per unit of risk. If you would invest 2,217 in MEG Energy Corp on August 25, 2024 and sell it today you would lose (301.00) from holding MEG Energy Corp or give up 13.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
MEG Energy Corp vs. Melbana Energy Limited
Performance |
| Timeline |
| MEG Energy Corp |
| Melbana Energy |
MEG Energy and Melbana Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MEG Energy and Melbana Energy
The main advantage of trading using opposite MEG Energy and Melbana Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MEG Energy position performs unexpectedly, Melbana 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 Melbana Energy will offset losses from the drop in Melbana Energy's long position.| MEG Energy vs. Petroleo Brasileiro Petrobras | MEG Energy vs. Equinor ASA ADR | MEG Energy vs. Eni SpA ADR | MEG Energy vs. YPF Sociedad Anonima |
| Melbana Energy vs. Permian Resources | Melbana Energy vs. Devon Energy | Melbana Energy vs. EOG Resources | Melbana Energy vs. Coterra 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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