Correlation Between Rockfire Resources and Falcon Oil
Can any of the company-specific risk be diversified away by investing in both Rockfire Resources and Falcon Oil 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 Rockfire Resources and Falcon Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rockfire Resources plc and Falcon Oil Gas, you can compare the effects of market volatilities on Rockfire Resources and Falcon Oil 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 Rockfire Resources with a short position of Falcon Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rockfire Resources and Falcon Oil.
Diversification Opportunities for Rockfire Resources and Falcon Oil
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Rockfire and Falcon is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Rockfire Resources plc and Falcon Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Oil Gas and Rockfire Resources 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 Rockfire Resources plc are associated (or correlated) with Falcon Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Oil Gas has no effect on the direction of Rockfire Resources i.e., Rockfire Resources and Falcon Oil go up and down completely randomly.
Pair Corralation between Rockfire Resources and Falcon Oil
Assuming the 90 days trading horizon Rockfire Resources plc is expected to generate 1.71 times more return on investment than Falcon Oil. However, Rockfire Resources is 1.71 times more volatile than Falcon Oil Gas. It trades about -0.03 of its potential returns per unit of risk. Falcon Oil Gas is currently generating about -0.05 per unit of risk. If you would invest 31.00 in Rockfire Resources plc on August 31, 2024 and sell it today you would lose (20.00) from holding Rockfire Resources plc or give up 64.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 89.15% |
| Values | Daily Returns |
Rockfire Resources plc vs. Falcon Oil Gas
Performance |
| Timeline |
| Rockfire Resources plc |
| Falcon Oil Gas |
Rockfire Resources and Falcon Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rockfire Resources and Falcon Oil
The main advantage of trading using opposite Rockfire Resources and Falcon Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rockfire Resources position performs unexpectedly, Falcon Oil 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 Falcon Oil will offset losses from the drop in Falcon Oil's long position.| Rockfire Resources vs. Charter Communications Cl | Rockfire Resources vs. Creo Medical Group | Rockfire Resources vs. Verizon Communications | Rockfire Resources vs. Futura Medical |
| Falcon Oil vs. Lendinvest PLC | Falcon Oil vs. Batm Advanced Communications | Falcon Oil vs. Ally Financial | Falcon Oil vs. Bank of Ireland |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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