Correlation Between Otto Energy and Prodigy Gold
Can any of the company-specific risk be diversified away by investing in both Otto Energy and Prodigy Gold 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 Otto Energy and Prodigy Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Otto Energy and Prodigy Gold NL, you can compare the effects of market volatilities on Otto Energy and Prodigy Gold 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 Otto Energy with a short position of Prodigy Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Otto Energy and Prodigy Gold.
Diversification Opportunities for Otto Energy and Prodigy Gold
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Otto and Prodigy is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Otto Energy and Prodigy Gold NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prodigy Gold NL and Otto Energy 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 Otto Energy are associated (or correlated) with Prodigy Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prodigy Gold NL has no effect on the direction of Otto Energy i.e., Otto Energy and Prodigy Gold go up and down completely randomly.
Pair Corralation between Otto Energy and Prodigy Gold
Assuming the 90 days trading horizon Otto Energy is expected to generate 0.68 times more return on investment than Prodigy Gold. However, Otto Energy is 1.47 times less risky than Prodigy Gold. It trades about 0.1 of its potential returns per unit of risk. Prodigy Gold NL is currently generating about 0.04 per unit of risk. If you would invest 1.00 in Otto Energy on November 2, 2024 and sell it today you would earn a total of 0.10 from holding Otto Energy or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Otto Energy vs. Prodigy Gold NL
Performance |
| Timeline |
| Otto Energy |
| Prodigy Gold NL |
Otto Energy and Prodigy Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Otto Energy and Prodigy Gold
The main advantage of trading using opposite Otto Energy and Prodigy Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Otto Energy position performs unexpectedly, Prodigy Gold 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 Prodigy Gold will offset losses from the drop in Prodigy Gold's long position.| Otto Energy vs. Westpac Banking | Otto Energy vs. ABACUS STORAGE KING | Otto Energy vs. Odyssey Energy | Otto Energy vs. Qantas Airways |
| Prodigy Gold vs. Sports Entertainment Group | Prodigy Gold vs. Norfolk Metals | Prodigy Gold vs. Centaurus Metals | Prodigy Gold vs. Bell Financial Group |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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