Correlation Between North European and PrimeEnergy
Can any of the company-specific risk be diversified away by investing in both North European and PrimeEnergy 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 North European and PrimeEnergy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North European Oil and PrimeEnergy, you can compare the effects of market volatilities on North European and PrimeEnergy 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 North European with a short position of PrimeEnergy. Check out your portfolio center. Please also check ongoing floating volatility patterns of North European and PrimeEnergy.
Diversification Opportunities for North European and PrimeEnergy
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between North and PrimeEnergy is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding North European Oil and PrimeEnergy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PrimeEnergy and North European 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 North European Oil are associated (or correlated) with PrimeEnergy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PrimeEnergy has no effect on the direction of North European i.e., North European and PrimeEnergy go up and down completely randomly.
Pair Corralation between North European and PrimeEnergy
Considering the 90-day investment horizon North European Oil is expected to under-perform the PrimeEnergy. In addition to that, North European is 1.33 times more volatile than PrimeEnergy. It trades about -0.03 of its total potential returns per unit of risk. PrimeEnergy is currently generating about 0.08 per unit of volatility. If you would invest 8,989 in PrimeEnergy on November 2, 2024 and sell it today you would earn a total of 14,262 from holding PrimeEnergy or generate 158.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
North European Oil vs. PrimeEnergy
Performance |
| Timeline |
| North European Oil |
| PrimeEnergy |
North European and PrimeEnergy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North European and PrimeEnergy
The main advantage of trading using opposite North European and PrimeEnergy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North European position performs unexpectedly, PrimeEnergy 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 PrimeEnergy will offset losses from the drop in PrimeEnergy's long position.| North European vs. Cross Timbers Royalty | North European vs. VOC Energy Trust | North European vs. Sabine Royalty Trust | North European vs. Permianville Royalty Trust |
| PrimeEnergy vs. Epsilon Energy | PrimeEnergy vs. Crescent Energy Co | PrimeEnergy vs. Evolution Petroleum | PrimeEnergy vs. MorningStar Partners, LP |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |