Correlation Between Prospera Energy and Pine Cliff
Can any of the company-specific risk be diversified away by investing in both Prospera Energy and Pine Cliff 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 Prospera Energy and Pine Cliff into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prospera Energy and Pine Cliff Energy, you can compare the effects of market volatilities on Prospera Energy and Pine Cliff 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 Prospera Energy with a short position of Pine Cliff. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prospera Energy and Pine Cliff.
Diversification Opportunities for Prospera Energy and Pine Cliff
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Prospera and Pine is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Prospera Energy and Pine Cliff Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pine Cliff Energy and Prospera 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 Prospera Energy are associated (or correlated) with Pine Cliff. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pine Cliff Energy has no effect on the direction of Prospera Energy i.e., Prospera Energy and Pine Cliff go up and down completely randomly.
Pair Corralation between Prospera Energy and Pine Cliff
Assuming the 90 days horizon Prospera Energy is expected to generate 3.02 times more return on investment than Pine Cliff. However, Prospera Energy is 3.02 times more volatile than Pine Cliff Energy. It trades about 0.26 of its potential returns per unit of risk. Pine Cliff Energy is currently generating about 0.24 per unit of risk. If you would invest 3.00 in Prospera Energy on October 24, 2024 and sell it today you would earn a total of 1.50 from holding Prospera Energy or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prospera Energy vs. Pine Cliff Energy
Performance |
| Timeline |
| Prospera Energy |
| Pine Cliff Energy |
Prospera Energy and Pine Cliff Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prospera Energy and Pine Cliff
The main advantage of trading using opposite Prospera Energy and Pine Cliff positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prospera Energy position performs unexpectedly, Pine Cliff 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 Pine Cliff will offset losses from the drop in Pine Cliff's long position.| Prospera Energy vs. Prairie Provident Resources | Prospera Energy vs. WesCan Energy Corp | Prospera Energy vs. ROK Resources |
| Pine Cliff vs. Gear Energy | Pine Cliff vs. Headwater Exploration | Pine Cliff vs. Cardinal Energy | Pine Cliff vs. Journey Energy |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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