Correlation Between MMEX Resources and Prairie Provident
Can any of the company-specific risk be diversified away by investing in both MMEX Resources 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 MMEX Resources and Prairie Provident into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MMEX Resources Corp and Prairie Provident Resources, you can compare the effects of market volatilities on MMEX Resources 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 MMEX Resources with a short position of Prairie Provident. Check out your portfolio center. Please also check ongoing floating volatility patterns of MMEX Resources and Prairie Provident.
Diversification Opportunities for MMEX Resources and Prairie Provident
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MMEX and Prairie is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding MMEX Resources Corp and Prairie Provident Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prairie Provident and MMEX Resources 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 MMEX Resources Corp 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 MMEX Resources i.e., MMEX Resources and Prairie Provident go up and down completely randomly.
Pair Corralation between MMEX Resources and Prairie Provident
Given the investment horizon of 90 days MMEX Resources Corp is expected to generate 15.9 times more return on investment than Prairie Provident. However, MMEX Resources is 15.9 times more volatile than Prairie Provident Resources. It trades about 0.21 of its potential returns per unit of risk. Prairie Provident Resources is currently generating about 0.05 per unit of risk. If you would invest 2.60 in MMEX Resources Corp on September 1, 2024 and sell it today you would lose (2.59) from holding MMEX Resources Corp or give up 99.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
MMEX Resources Corp vs. Prairie Provident Resources
Performance |
| Timeline |
| MMEX Resources Corp |
| Prairie Provident |
MMEX Resources and Prairie Provident Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MMEX Resources and Prairie Provident
The main advantage of trading using opposite MMEX Resources and Prairie Provident positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MMEX Resources 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.| MMEX Resources vs. MDM Permian | MMEX Resources vs. Saturn Oil Gas | MMEX Resources vs. Razor Energy Corp | MMEX Resources vs. Strat Petroleum |
| Prairie Provident vs. San Leon Energy | Prairie Provident vs. Enwell Energy plc | Prairie Provident vs. Dno ASA | Prairie Provident vs. Questerre 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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