Correlation Between San Juan and Dno ASA
Can any of the company-specific risk be diversified away by investing in both San Juan and Dno ASA 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 Dno ASA 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 Dno ASA, you can compare the effects of market volatilities on San Juan and Dno ASA 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 Dno ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of San Juan and Dno ASA.
Diversification Opportunities for San Juan and Dno ASA
Good diversification
The 3 months correlation between San and Dno is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding San Juan Basin and Dno ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dno ASA 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 Dno ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dno ASA has no effect on the direction of San Juan i.e., San Juan and Dno ASA go up and down completely randomly.
Pair Corralation between San Juan and Dno ASA
Considering the 90-day investment horizon San Juan Basin is expected to under-perform the Dno ASA. But the stock apears to be less risky and, when comparing its historical volatility, San Juan Basin is 5.59 times less risky than Dno ASA. The stock trades about -0.05 of its potential returns per unit of risk. The Dno ASA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 119.00 in Dno ASA on August 24, 2024 and sell it today you would lose (29.00) from holding Dno ASA or give up 24.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 72.78% |
| Values | Daily Returns |
San Juan Basin vs. Dno ASA
Performance |
| Timeline |
| San Juan Basin |
| Dno ASA |
San Juan and Dno ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with San Juan and Dno ASA
The main advantage of trading using opposite San Juan and Dno ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if San Juan position performs unexpectedly, Dno ASA 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 Dno ASA will offset losses from the drop in Dno ASA'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 |
| Dno ASA vs. Permian Resources | Dno ASA vs. Devon Energy | Dno ASA vs. EOG Resources | Dno ASA vs. Coterra Energy |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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