Correlation Between Pine Cliff and AER Energy
Can any of the company-specific risk be diversified away by investing in both Pine Cliff and AER Energy 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 Pine Cliff and AER Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pine Cliff Energy and AER Energy Resources, you can compare the effects of market volatilities on Pine Cliff and AER Energy 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 Pine Cliff with a short position of AER Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pine Cliff and AER Energy.
Diversification Opportunities for Pine Cliff and AER Energy
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pine and AER is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Pine Cliff Energy and AER Energy Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AER Energy Resources and Pine Cliff 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 Pine Cliff Energy are associated (or correlated) with AER Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AER Energy Resources has no effect on the direction of Pine Cliff i.e., Pine Cliff and AER Energy go up and down completely randomly.
Pair Corralation between Pine Cliff and AER Energy
Assuming the 90 days horizon Pine Cliff Energy is expected to under-perform the AER Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Pine Cliff Energy is 25.92 times less risky than AER Energy. The pink sheet trades about -0.05 of its potential returns per unit of risk. The AER Energy Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 0.01 in AER Energy Resources on August 26, 2024 and sell it today you would earn a total of 0.00 from holding AER Energy Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Pine Cliff Energy vs. AER Energy Resources
Performance |
| Timeline |
| Pine Cliff Energy |
| AER Energy Resources |
Pine Cliff and AER Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pine Cliff and AER Energy
The main advantage of trading using opposite Pine Cliff and AER Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pine Cliff position performs unexpectedly, AER Energy 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 AER Energy will offset losses from the drop in AER Energy's long position.| Pine Cliff vs. Petroleo Brasileiro Petrobras | Pine Cliff vs. Equinor ASA ADR | Pine Cliff vs. Eni SpA ADR | Pine Cliff vs. YPF Sociedad Anonima |
| AER Energy vs. Caduceus Software Systems | AER Energy vs. North Springs Resources | AER Energy vs. Nyxio Tech Corp | AER Energy vs. Access Power Co |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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