Correlation Between Origin Energy and Ecofibre
Can any of the company-specific risk be diversified away by investing in both Origin Energy and Ecofibre 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 Origin Energy and Ecofibre into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Energy and Ecofibre, you can compare the effects of market volatilities on Origin Energy and Ecofibre 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 Origin Energy with a short position of Ecofibre. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Energy and Ecofibre.
Diversification Opportunities for Origin Energy and Ecofibre
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Origin and Ecofibre is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Origin Energy and Ecofibre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecofibre and Origin 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 Origin Energy are associated (or correlated) with Ecofibre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecofibre has no effect on the direction of Origin Energy i.e., Origin Energy and Ecofibre go up and down completely randomly.
Pair Corralation between Origin Energy and Ecofibre
Assuming the 90 days trading horizon Origin Energy is expected to generate 0.16 times more return on investment than Ecofibre. However, Origin Energy is 6.13 times less risky than Ecofibre. It trades about 0.08 of its potential returns per unit of risk. Ecofibre is currently generating about -0.02 per unit of risk. If you would invest 773.00 in Origin Energy on September 1, 2024 and sell it today you would earn a total of 314.00 from holding Origin Energy or generate 40.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Origin Energy vs. Ecofibre
Performance |
| Timeline |
| Origin Energy |
| Ecofibre |
Origin Energy and Ecofibre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Energy and Ecofibre
The main advantage of trading using opposite Origin Energy and Ecofibre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Energy position performs unexpectedly, Ecofibre 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 Ecofibre will offset losses from the drop in Ecofibre's long position.| Origin Energy vs. Aurelia Metals | Origin Energy vs. Advanced Braking Technology | Origin Energy vs. Richmond Vanadium Technology | Origin Energy vs. Ainsworth Game Technology |
| Ecofibre vs. Credit Clear | Ecofibre vs. Lendlease Group | Ecofibre vs. Finexia Financial Group | Ecofibre vs. Westpac Banking |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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