Correlation Between Niko Resources and Gear Energy
Can any of the company-specific risk be diversified away by investing in both Niko Resources 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 Niko Resources and Gear Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Niko Resources and Gear Energy, you can compare the effects of market volatilities on Niko Resources 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 Niko Resources with a short position of Gear Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Niko Resources and Gear Energy.
Diversification Opportunities for Niko Resources and Gear Energy
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Niko and Gear is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Niko Resources and Gear Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gear Energy and Niko 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 Niko Resources 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 Niko Resources i.e., Niko Resources and Gear Energy go up and down completely randomly.
Pair Corralation between Niko Resources and Gear Energy
If you would invest 33.00 in Gear Energy on October 23, 2024 and sell it today you would earn a total of 1.00 from holding Gear Energy or generate 3.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Niko Resources vs. Gear Energy
Performance |
| Timeline |
| Niko Resources |
| Gear Energy |
Niko Resources and Gear Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Niko Resources and Gear Energy
The main advantage of trading using opposite Niko Resources and Gear Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Niko Resources 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.| Niko Resources vs. Imperial Res | Niko Resources vs. Strat Petroleum | Niko Resources vs. Century Petroleum Corp |
| Gear Energy vs. Tamarack Valley Energy | Gear Energy vs. MEG Energy Corp | Gear Energy vs. Cardinal Energy | Gear Energy vs. Whitecap Resources |
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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