Correlation Between Secure Energy and NuVista Energy
Can any of the company-specific risk be diversified away by investing in both Secure Energy and NuVista 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 Secure Energy and NuVista Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Secure Energy Services and NuVista Energy, you can compare the effects of market volatilities on Secure Energy and NuVista 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 Secure Energy with a short position of NuVista Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Secure Energy and NuVista Energy.
Diversification Opportunities for Secure Energy and NuVista Energy
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Secure and NuVista is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Secure Energy Services and NuVista Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NuVista Energy and Secure 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 Secure Energy Services are associated (or correlated) with NuVista Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NuVista Energy has no effect on the direction of Secure Energy i.e., Secure Energy and NuVista Energy go up and down completely randomly.
Pair Corralation between Secure Energy and NuVista Energy
Assuming the 90 days trading horizon Secure Energy Services is expected to generate 0.83 times more return on investment than NuVista Energy. However, Secure Energy Services is 1.21 times less risky than NuVista Energy. It trades about -0.26 of its potential returns per unit of risk. NuVista Energy is currently generating about -0.22 per unit of risk. If you would invest 1,594 in Secure Energy Services on November 18, 2024 and sell it today you would lose (123.00) from holding Secure Energy Services or give up 7.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Secure Energy Services vs. NuVista Energy
Performance |
| Timeline |
| Secure Energy Services |
| NuVista Energy |
Secure Energy and NuVista Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Secure Energy and NuVista Energy
The main advantage of trading using opposite Secure Energy and NuVista Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Secure Energy position performs unexpectedly, NuVista 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 NuVista Energy will offset losses from the drop in NuVista Energy's long position.| Secure Energy vs. CES Energy Solutions | Secure Energy vs. Ensign Energy Services | Secure Energy vs. Enerflex | Secure Energy vs. Pason Systems |
| NuVista Energy vs. Tamarack Valley Energy | NuVista Energy vs. Birchcliff Energy | NuVista Energy vs. MEG Energy Corp |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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