Correlation Between Melbana Energy and Invictus Energy
Can any of the company-specific risk be diversified away by investing in both Melbana Energy and Invictus 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 Melbana Energy and Invictus Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melbana Energy Limited and Invictus Energy Limited, you can compare the effects of market volatilities on Melbana Energy and Invictus 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 Melbana Energy with a short position of Invictus Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melbana Energy and Invictus Energy.
Diversification Opportunities for Melbana Energy and Invictus Energy
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Melbana and Invictus is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Melbana Energy Limited and Invictus Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invictus Energy and Melbana 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 Melbana Energy Limited are associated (or correlated) with Invictus Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invictus Energy has no effect on the direction of Melbana Energy i.e., Melbana Energy and Invictus Energy go up and down completely randomly.
Pair Corralation between Melbana Energy and Invictus Energy
Assuming the 90 days horizon Melbana Energy Limited is expected to generate 5.64 times more return on investment than Invictus Energy. However, Melbana Energy is 5.64 times more volatile than Invictus Energy Limited. It trades about 0.03 of its potential returns per unit of risk. Invictus Energy Limited is currently generating about 0.02 per unit of risk. If you would invest 3.50 in Melbana Energy Limited on October 23, 2024 and sell it today you would lose (3.30) from holding Melbana Energy Limited or give up 94.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Melbana Energy Limited vs. Invictus Energy Limited
Performance |
| Timeline |
| Melbana Energy |
| Invictus Energy |
Melbana Energy and Invictus Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melbana Energy and Invictus Energy
The main advantage of trading using opposite Melbana Energy and Invictus Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melbana Energy position performs unexpectedly, Invictus 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 Invictus Energy will offset losses from the drop in Invictus Energy's long position.| Melbana Energy vs. Avanti Energy | Melbana Energy vs. CGX Energy | Melbana Energy vs. Royal Helium | Melbana Energy vs. Eco Oil Gas |
| Invictus Energy vs. Sintana Energy | Invictus Energy vs. 88 Energy Limited | Invictus Energy vs. Journey Energy | Invictus Energy vs. Trillion Energy International |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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