Correlation Between REX American and CN Energy
Can any of the company-specific risk be diversified away by investing in both REX American and CN 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 REX American and CN Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REX American Resources and CN Energy Group, you can compare the effects of market volatilities on REX American and CN 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 REX American with a short position of CN Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of REX American and CN Energy.
Diversification Opportunities for REX American and CN Energy
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between REX and CNEY is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding REX American Resources and CN Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CN Energy Group and REX American 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 REX American Resources are associated (or correlated) with CN Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CN Energy Group has no effect on the direction of REX American i.e., REX American and CN Energy go up and down completely randomly.
Pair Corralation between REX American and CN Energy
Considering the 90-day investment horizon REX American Resources is expected to under-perform the CN Energy. But the stock apears to be less risky and, when comparing its historical volatility, REX American Resources is 16.27 times less risky than CN Energy. The stock trades about -0.04 of its potential returns per unit of risk. The CN Energy Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 53.00 in CN Energy Group on August 31, 2024 and sell it today you would lose (20.00) from holding CN Energy Group or give up 37.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
REX American Resources vs. CN Energy Group
Performance |
| Timeline |
| REX American Resources |
| CN Energy Group |
REX American and CN Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REX American and CN Energy
The main advantage of trading using opposite REX American and CN Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REX American position performs unexpectedly, CN 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 CN Energy will offset losses from the drop in CN Energy's long position.| REX American vs. Innospec | REX American vs. H B Fuller | REX American vs. Quaker Chemical | REX American vs. Minerals Technologies |
| CN Energy vs. SenesTech | CN Energy vs. Danimer Scientific | CN Energy vs. C Bond Systems | CN Energy vs. Coroware |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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