Correlation Between Topaz Energy and Mullen
Can any of the company-specific risk be diversified away by investing in both Topaz Energy and Mullen 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 Topaz Energy and Mullen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Topaz Energy Corp and Mullen Group, you can compare the effects of market volatilities on Topaz Energy and Mullen 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 Topaz Energy with a short position of Mullen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Topaz Energy and Mullen.
Diversification Opportunities for Topaz Energy and Mullen
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Topaz and Mullen is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Topaz Energy Corp and Mullen Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mullen Group and Topaz 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 Topaz Energy Corp are associated (or correlated) with Mullen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mullen Group has no effect on the direction of Topaz Energy i.e., Topaz Energy and Mullen go up and down completely randomly.
Pair Corralation between Topaz Energy and Mullen
Assuming the 90 days trading horizon Topaz Energy Corp is expected to under-perform the Mullen. But the stock apears to be less risky and, when comparing its historical volatility, Topaz Energy Corp is 1.03 times less risky than Mullen. The stock trades about -0.53 of its potential returns per unit of risk. The Mullen Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,451 in Mullen Group on November 3, 2024 and sell it today you would earn a total of 39.00 from holding Mullen Group or generate 2.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Topaz Energy Corp vs. Mullen Group
Performance |
| Timeline |
| Topaz Energy Corp |
| Mullen Group |
Topaz Energy and Mullen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Topaz Energy and Mullen
The main advantage of trading using opposite Topaz Energy and Mullen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Topaz Energy position performs unexpectedly, Mullen 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 Mullen will offset losses from the drop in Mullen's long position.| Topaz Energy vs. Headwater Exploration | Topaz Energy vs. Tamarack Valley Energy | Topaz Energy vs. Freehold Royalties | Topaz Energy vs. Tourmaline Oil Corp |
| Mullen vs. Pason Systems | Mullen vs. Westshore Terminals Investment | Mullen vs. Superior Plus Corp | Mullen vs. Gibson 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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