Correlation Between Valeura Energy and CGX Energy
Can any of the company-specific risk be diversified away by investing in both Valeura Energy and CGX 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 Valeura Energy and CGX Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valeura Energy and CGX Energy, you can compare the effects of market volatilities on Valeura Energy and CGX 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 Valeura Energy with a short position of CGX Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valeura Energy and CGX Energy.
Diversification Opportunities for Valeura Energy and CGX Energy
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Valeura and CGX is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Valeura Energy and CGX Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGX Energy and Valeura 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 Valeura Energy are associated (or correlated) with CGX Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CGX Energy has no effect on the direction of Valeura Energy i.e., Valeura Energy and CGX Energy go up and down completely randomly.
Pair Corralation between Valeura Energy and CGX Energy
Assuming the 90 days horizon Valeura Energy is expected to generate 11.63 times less return on investment than CGX Energy. But when comparing it to its historical volatility, Valeura Energy is 2.11 times less risky than CGX Energy. It trades about 0.02 of its potential returns per unit of risk. CGX Energy is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 9.80 in CGX Energy on August 28, 2024 and sell it today you would earn a total of 4.20 from holding CGX Energy or generate 42.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Valeura Energy vs. CGX Energy
Performance |
| Timeline |
| Valeura Energy |
| CGX Energy |
Valeura Energy and CGX Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valeura Energy and CGX Energy
The main advantage of trading using opposite Valeura Energy and CGX Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valeura Energy position performs unexpectedly, CGX 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 CGX Energy will offset losses from the drop in CGX Energy's long position.| Valeura Energy vs. Legacy Education | Valeura Energy vs. NVIDIA | Valeura Energy vs. Apple Inc | Valeura Energy vs. Microsoft |
| CGX Energy vs. Avanti Energy | CGX Energy vs. Desert Mountain Energy | CGX Energy vs. Royal Helium | CGX Energy vs. Eco Oil Gas |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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