Correlation Between Pure Energy and Great Atlantic
Can any of the company-specific risk be diversified away by investing in both Pure Energy and Great Atlantic 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 Pure Energy and Great Atlantic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pure Energy Minerals and Great Atlantic Resources, you can compare the effects of market volatilities on Pure Energy and Great Atlantic 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 Pure Energy with a short position of Great Atlantic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pure Energy and Great Atlantic.
Diversification Opportunities for Pure Energy and Great Atlantic
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Pure and Great is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Pure Energy Minerals and Great Atlantic Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Atlantic Resources and Pure 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 Pure Energy Minerals are associated (or correlated) with Great Atlantic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Atlantic Resources has no effect on the direction of Pure Energy i.e., Pure Energy and Great Atlantic go up and down completely randomly.
Pair Corralation between Pure Energy and Great Atlantic
Given the investment horizon of 90 days Pure Energy is expected to generate 3.32 times less return on investment than Great Atlantic. But when comparing it to its historical volatility, Pure Energy Minerals is 1.26 times less risky than Great Atlantic. It trades about 0.02 of its potential returns per unit of risk. Great Atlantic Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 5.00 in Great Atlantic Resources on September 3, 2024 and sell it today you would earn a total of 1.50 from holding Great Atlantic Resources or generate 30.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pure Energy Minerals vs. Great Atlantic Resources
Performance |
| Timeline |
| Pure Energy Minerals |
| Great Atlantic Resources |
Pure Energy and Great Atlantic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pure Energy and Great Atlantic
The main advantage of trading using opposite Pure Energy and Great Atlantic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pure Energy position performs unexpectedly, Great Atlantic 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 Great Atlantic will offset losses from the drop in Great Atlantic's long position.| Pure Energy vs. Algoma Steel Group | Pure Energy vs. Champion Iron | Pure Energy vs. International Zeolite Corp | Pure Energy vs. European Residential Real |
| Great Atlantic vs. Algoma Steel Group | Great Atlantic vs. Champion Iron | Great Atlantic vs. International Zeolite Corp | Great Atlantic vs. European Residential Real |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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