Correlation Between Secure Energy and Western Energy
Can any of the company-specific risk be diversified away by investing in both Secure Energy and Western 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 Western 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 Western Energy Services, you can compare the effects of market volatilities on Secure Energy and Western 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 Western Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Secure Energy and Western Energy.
Diversification Opportunities for Secure Energy and Western Energy
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Secure and Western is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Secure Energy Services and Western Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Energy Services 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 Western Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Energy Services has no effect on the direction of Secure Energy i.e., Secure Energy and Western Energy go up and down completely randomly.
Pair Corralation between Secure Energy and Western Energy
Assuming the 90 days trading horizon Secure Energy Services is expected to generate 0.34 times more return on investment than Western Energy. However, Secure Energy Services is 2.98 times less risky than Western Energy. It trades about 0.08 of its potential returns per unit of risk. Western Energy Services is currently generating about 0.03 per unit of risk. If you would invest 1,551 in Secure Energy Services on September 1, 2024 and sell it today you would earn a total of 34.00 from holding Secure Energy Services or generate 2.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Secure Energy Services vs. Western Energy Services
Performance |
| Timeline |
| Secure Energy Services |
| Western Energy Services |
Secure Energy and Western Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Secure Energy and Western Energy
The main advantage of trading using opposite Secure Energy and Western Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Secure Energy position performs unexpectedly, Western 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 Western Energy will offset losses from the drop in Western 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 |
| Western Energy vs. Total Energy Services | Western Energy vs. PHX Energy Services | Western Energy vs. Calfrac Well Services |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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