Correlation Between San Juan and Arrow Exploration
Can any of the company-specific risk be diversified away by investing in both San Juan and Arrow Exploration 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 San Juan and Arrow Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between San Juan Basin and Arrow Exploration Corp, you can compare the effects of market volatilities on San Juan and Arrow Exploration 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 San Juan with a short position of Arrow Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of San Juan and Arrow Exploration.
Diversification Opportunities for San Juan and Arrow Exploration
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between San and Arrow is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding San Juan Basin and Arrow Exploration Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Exploration Corp and San Juan 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 San Juan Basin are associated (or correlated) with Arrow Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Exploration Corp has no effect on the direction of San Juan i.e., San Juan and Arrow Exploration go up and down completely randomly.
Pair Corralation between San Juan and Arrow Exploration
Considering the 90-day investment horizon San Juan is expected to generate 1.1 times less return on investment than Arrow Exploration. But when comparing it to its historical volatility, San Juan Basin is 4.65 times less risky than Arrow Exploration. It trades about 0.18 of its potential returns per unit of risk. Arrow Exploration Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 33.00 in Arrow Exploration Corp on September 4, 2024 and sell it today you would lose (4.00) from holding Arrow Exploration Corp or give up 12.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
San Juan Basin vs. Arrow Exploration Corp
Performance |
| Timeline |
| San Juan Basin |
| Arrow Exploration Corp |
San Juan and Arrow Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with San Juan and Arrow Exploration
The main advantage of trading using opposite San Juan and Arrow Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if San Juan position performs unexpectedly, Arrow Exploration 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 Arrow Exploration will offset losses from the drop in Arrow Exploration's long position.| San Juan vs. Sabine Royalty Trust | San Juan vs. Permian Basin Royalty | San Juan vs. Cross Timbers Royalty | San Juan vs. Mesa Royalty Trust |
| Arrow Exploration vs. CNX Resources Corp | Arrow Exploration vs. MV Oil Trust | Arrow Exploration vs. San Juan Basin | Arrow Exploration vs. VOC Energy Trust |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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