Correlation Between Select Energy and Linde Plc
Can any of the company-specific risk be diversified away by investing in both Select Energy and Linde Plc 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 Select Energy and Linde Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Select Energy Services and Linde plc Ordinary, you can compare the effects of market volatilities on Select Energy and Linde Plc 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 Select Energy with a short position of Linde Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Energy and Linde Plc.
Diversification Opportunities for Select Energy and Linde Plc
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Select and Linde is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Select Energy Services and Linde plc Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linde plc Ordinary and Select 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 Select Energy Services are associated (or correlated) with Linde Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linde plc Ordinary has no effect on the direction of Select Energy i.e., Select Energy and Linde Plc go up and down completely randomly.
Pair Corralation between Select Energy and Linde Plc
Given the investment horizon of 90 days Select Energy Services is expected to generate 5.38 times more return on investment than Linde Plc. However, Select Energy is 5.38 times more volatile than Linde plc Ordinary. It trades about 0.28 of its potential returns per unit of risk. Linde plc Ordinary is currently generating about -0.19 per unit of risk. If you would invest 1,072 in Select Energy Services on August 27, 2024 and sell it today you would earn a total of 397.00 from holding Select Energy Services or generate 37.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Select Energy Services vs. Linde plc Ordinary
Performance |
| Timeline |
| Select Energy Services |
| Linde plc Ordinary |
Select Energy and Linde Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Select Energy and Linde Plc
The main advantage of trading using opposite Select Energy and Linde Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Energy position performs unexpectedly, Linde Plc 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 Linde Plc will offset losses from the drop in Linde Plc's long position.| Select Energy vs. ProPetro Holding Corp | Select Energy vs. RPC Inc | Select Energy vs. MRC Global | Select Energy vs. Expro Group Holdings |
| Linde Plc vs. PPG Industries | Linde Plc vs. Ecolab Inc | Linde Plc vs. Sherwin Williams Co | Linde Plc vs. LyondellBasell Industries NV |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |