Correlation Between YPF Sociedad and Headwater Exploration
Can any of the company-specific risk be diversified away by investing in both YPF Sociedad and Headwater 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 YPF Sociedad and Headwater Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between YPF Sociedad Anonima and Headwater Exploration, you can compare the effects of market volatilities on YPF Sociedad and Headwater 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 YPF Sociedad with a short position of Headwater Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of YPF Sociedad and Headwater Exploration.
Diversification Opportunities for YPF Sociedad and Headwater Exploration
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between YPF and Headwater is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding YPF Sociedad Anonima and Headwater Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Headwater Exploration and YPF Sociedad 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 YPF Sociedad Anonima are associated (or correlated) with Headwater Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Headwater Exploration has no effect on the direction of YPF Sociedad i.e., YPF Sociedad and Headwater Exploration go up and down completely randomly.
Pair Corralation between YPF Sociedad and Headwater Exploration
Considering the 90-day investment horizon YPF Sociedad Anonima is expected to generate 1.97 times more return on investment than Headwater Exploration. However, YPF Sociedad is 1.97 times more volatile than Headwater Exploration. It trades about 0.1 of its potential returns per unit of risk. Headwater Exploration is currently generating about 0.01 per unit of risk. If you would invest 1,426 in YPF Sociedad Anonima on August 26, 2024 and sell it today you would earn a total of 2,577 from holding YPF Sociedad Anonima or generate 180.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.7% |
| Values | Daily Returns |
YPF Sociedad Anonima vs. Headwater Exploration
Performance |
| Timeline |
| YPF Sociedad Anonima |
| Headwater Exploration |
YPF Sociedad and Headwater Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YPF Sociedad and Headwater Exploration
The main advantage of trading using opposite YPF Sociedad and Headwater Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YPF Sociedad position performs unexpectedly, Headwater 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 Headwater Exploration will offset losses from the drop in Headwater Exploration's long position.| YPF Sociedad vs. National Fuel Gas | YPF Sociedad vs. Eni SpA ADR | YPF Sociedad vs. Ecopetrol SA ADR | YPF Sociedad vs. TotalEnergies SE ADR |
| Headwater Exploration vs. Petroleo Brasileiro Petrobras | Headwater Exploration vs. Equinor ASA ADR | Headwater Exploration vs. Eni SpA ADR | Headwater Exploration vs. YPF Sociedad Anonima |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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