Correlation Between Resource Base and Odyssey Energy
Can any of the company-specific risk be diversified away by investing in both Resource Base and Odyssey 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 Resource Base and Odyssey Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Resource Base and Odyssey Energy, you can compare the effects of market volatilities on Resource Base and Odyssey 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 Resource Base with a short position of Odyssey Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Resource Base and Odyssey Energy.
Diversification Opportunities for Resource Base and Odyssey Energy
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Resource and Odyssey is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Resource Base and Odyssey Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odyssey Energy and Resource Base 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 Resource Base are associated (or correlated) with Odyssey Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odyssey Energy has no effect on the direction of Resource Base i.e., Resource Base and Odyssey Energy go up and down completely randomly.
Pair Corralation between Resource Base and Odyssey Energy
Assuming the 90 days trading horizon Resource Base is expected to generate 0.62 times more return on investment than Odyssey Energy. However, Resource Base is 1.61 times less risky than Odyssey Energy. It trades about 0.17 of its potential returns per unit of risk. Odyssey Energy is currently generating about -0.06 per unit of risk. If you would invest 3.60 in Resource Base on September 2, 2024 and sell it today you would earn a total of 0.40 from holding Resource Base or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Resource Base vs. Odyssey Energy
Performance |
| Timeline |
| Resource Base |
| Odyssey Energy |
Resource Base and Odyssey Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Resource Base and Odyssey Energy
The main advantage of trading using opposite Resource Base and Odyssey Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Resource Base position performs unexpectedly, Odyssey 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 Odyssey Energy will offset losses from the drop in Odyssey Energy's long position.| Resource Base vs. The Environmental Group | Resource Base vs. Credit Clear | Resource Base vs. Duxton Broadacre Farms | Resource Base vs. Hawsons Iron |
| Odyssey Energy vs. Hudson Investment Group | Odyssey Energy vs. Carlton Investments | Odyssey Energy vs. Neurotech International | Odyssey Energy vs. Ras Technology Holdings |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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