Correlation Between NYSE Composite and Rockhopper Exploration
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Rockhopper Exploration 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 NYSE Composite and Rockhopper Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Rockhopper Exploration plc, you can compare the effects of market volatilities on NYSE Composite and Rockhopper Exploration 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 NYSE Composite with a short position of Rockhopper Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Rockhopper Exploration.
Diversification Opportunities for NYSE Composite and Rockhopper Exploration
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between NYSE and Rockhopper is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Rockhopper Exploration plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockhopper Exploration and NYSE Composite 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 NYSE Composite are associated (or correlated) with Rockhopper Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockhopper Exploration has no effect on the direction of NYSE Composite i.e., NYSE Composite and Rockhopper Exploration go up and down completely randomly.
Pair Corralation between NYSE Composite and Rockhopper Exploration
Assuming the 90 days trading horizon NYSE Composite is expected to generate 7.53 times less return on investment than Rockhopper Exploration. But when comparing it to its historical volatility, NYSE Composite is 7.43 times less risky than Rockhopper Exploration. It trades about 0.08 of its potential returns per unit of risk. Rockhopper Exploration plc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 12.00 in Rockhopper Exploration plc on November 19, 2024 and sell it today you would earn a total of 37.00 from holding Rockhopper Exploration plc or generate 308.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Rockhopper Exploration plc
Performance |
| Timeline |
NYSE Composite and Rockhopper Exploration Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Rockhopper Exploration plc
Pair trading matchups for Rockhopper Exploration
Pair Trading with NYSE Composite and Rockhopper Exploration
The main advantage of trading using opposite NYSE Composite and Rockhopper Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Rockhopper Exploration 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 Rockhopper Exploration will offset losses from the drop in Rockhopper Exploration's long position.| NYSE Composite vs. Regeneron Pharmaceuticals | NYSE Composite vs. Compania Cervecerias Unidas | NYSE Composite vs. Ambev SA ADR | NYSE Composite vs. Monster Beverage Corp |
| Rockhopper Exploration vs. PetroShale | Rockhopper Exploration vs. Pieridae Energy Limited | Rockhopper Exploration vs. EnQuest PLC | Rockhopper Exploration vs. Sino American Oil |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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