Correlation Between North European and XXL Energy
Can any of the company-specific risk be diversified away by investing in both North European and XXL 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 North European and XXL Energy 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 XXL Energy Corp, you can compare the effects of market volatilities on North European and XXL 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 North European with a short position of XXL Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of North European and XXL Energy.
Diversification Opportunities for North European and XXL Energy
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between North and XXL is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding North European Oil and XXL Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XXL Energy Corp 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 XXL Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XXL Energy Corp has no effect on the direction of North European i.e., North European and XXL Energy go up and down completely randomly.
Pair Corralation between North European and XXL Energy
If you would invest 0.16 in XXL Energy Corp on August 31, 2024 and sell it today you would earn a total of 0.00 from holding XXL Energy Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
North European Oil vs. XXL Energy Corp
Performance |
| Timeline |
| North European Oil |
| XXL Energy Corp |
North European and XXL Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North European and XXL Energy
The main advantage of trading using opposite North European and XXL Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North European position performs unexpectedly, XXL 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 XXL Energy will offset losses from the drop in XXL Energy'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 |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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