Correlation Between National Reinsurance and PXP Energy
Can any of the company-specific risk be diversified away by investing in both National Reinsurance and PXP 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 National Reinsurance and PXP Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Reinsurance and PXP Energy Corp, you can compare the effects of market volatilities on National Reinsurance and PXP 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 National Reinsurance with a short position of PXP Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Reinsurance and PXP Energy.
Diversification Opportunities for National Reinsurance and PXP Energy
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between National and PXP is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding National Reinsurance and PXP Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PXP Energy Corp and National Reinsurance 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 National Reinsurance are associated (or correlated) with PXP Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PXP Energy Corp has no effect on the direction of National Reinsurance i.e., National Reinsurance and PXP Energy go up and down completely randomly.
Pair Corralation between National Reinsurance and PXP Energy
Assuming the 90 days trading horizon National Reinsurance is expected to generate 1.74 times more return on investment than PXP Energy. However, National Reinsurance is 1.74 times more volatile than PXP Energy Corp. It trades about 0.07 of its potential returns per unit of risk. PXP Energy Corp is currently generating about -0.01 per unit of risk. If you would invest 38.00 in National Reinsurance on August 29, 2024 and sell it today you would earn a total of 17.00 from holding National Reinsurance or generate 44.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 75.86% |
| Values | Daily Returns |
National Reinsurance vs. PXP Energy Corp
Performance |
| Timeline |
| National Reinsurance |
| PXP Energy Corp |
National Reinsurance and PXP Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Reinsurance and PXP Energy
The main advantage of trading using opposite National Reinsurance and PXP Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Reinsurance position performs unexpectedly, PXP 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 PXP Energy will offset losses from the drop in PXP Energy's long position.| National Reinsurance vs. Manulife Financial Corp | National Reinsurance vs. Sun Life Financial | National Reinsurance vs. Allhome Corp | National Reinsurance vs. Jollibee Foods Corp |
| PXP Energy vs. Security Bank Corp | PXP Energy vs. Converge Information Communications | PXP Energy vs. Bank of the | PXP Energy vs. Philex Mining Corp |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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