Correlation Between NYSE Composite and XCana Petroleum
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and XCana Petroleum 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 XCana Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and XCana Petroleum, you can compare the effects of market volatilities on NYSE Composite and XCana Petroleum 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 XCana Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and XCana Petroleum.
Diversification Opportunities for NYSE Composite and XCana Petroleum
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NYSE and XCana is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and XCana Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XCana Petroleum 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 XCana Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XCana Petroleum has no effect on the direction of NYSE Composite i.e., NYSE Composite and XCana Petroleum go up and down completely randomly.
Pair Corralation between NYSE Composite and XCana Petroleum
Assuming the 90 days trading horizon NYSE Composite is expected to generate 8.81 times less return on investment than XCana Petroleum. But when comparing it to its historical volatility, NYSE Composite is 47.09 times less risky than XCana Petroleum. It trades about 0.26 of its potential returns per unit of risk. XCana Petroleum is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 5.04 in XCana Petroleum on August 30, 2024 and sell it today you would lose (2.44) from holding XCana Petroleum or give up 48.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. XCana Petroleum
Performance |
| Timeline |
NYSE Composite and XCana Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
XCana Petroleum
Pair trading matchups for XCana Petroleum
Pair Trading with NYSE Composite and XCana Petroleum
The main advantage of trading using opposite NYSE Composite and XCana Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, XCana Petroleum 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 XCana Petroleum will offset losses from the drop in XCana Petroleum's long position.| NYSE Composite vs. Delek Drilling | NYSE Composite vs. Helmerich and Payne | NYSE Composite vs. Waste Management | NYSE Composite vs. US Global Investors |
| XCana Petroleum vs. Green Planet Bio | XCana Petroleum vs. Azure Holding Group | XCana Petroleum vs. Four Leaf Acquisition | XCana Petroleum vs. Opus Magnum Ameris |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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