Correlation Between SLR Investment and ENERGY ONE
Can any of the company-specific risk be diversified away by investing in both SLR Investment and ENERGY ONE 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 SLR Investment and ENERGY ONE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SLR Investment Corp and ENERGY ONE, you can compare the effects of market volatilities on SLR Investment and ENERGY ONE 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 SLR Investment with a short position of ENERGY ONE. Check out your portfolio center. Please also check ongoing floating volatility patterns of SLR Investment and ENERGY ONE.
Diversification Opportunities for SLR Investment and ENERGY ONE
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SLR and ENERGY is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding SLR Investment Corp and ENERGY ONE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENERGY ONE and SLR Investment 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 SLR Investment Corp are associated (or correlated) with ENERGY ONE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENERGY ONE has no effect on the direction of SLR Investment i.e., SLR Investment and ENERGY ONE go up and down completely randomly.
Pair Corralation between SLR Investment and ENERGY ONE
Assuming the 90 days horizon SLR Investment is expected to generate 1.33 times less return on investment than ENERGY ONE. But when comparing it to its historical volatility, SLR Investment Corp is 2.18 times less risky than ENERGY ONE. It trades about 0.23 of its potential returns per unit of risk. ENERGY ONE is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 344.00 in ENERGY ONE on September 15, 2024 and sell it today you would earn a total of 32.00 from holding ENERGY ONE or generate 9.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
SLR Investment Corp vs. ENERGY ONE
Performance |
| Timeline |
| SLR Investment Corp |
| ENERGY ONE |
SLR Investment and ENERGY ONE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SLR Investment and ENERGY ONE
The main advantage of trading using opposite SLR Investment and ENERGY ONE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SLR Investment position performs unexpectedly, ENERGY ONE 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 ENERGY ONE will offset losses from the drop in ENERGY ONE's long position.| SLR Investment vs. LION ONE METALS | SLR Investment vs. TAL Education Group | SLR Investment vs. Perdoceo Education | SLR Investment vs. Adtalem Global Education |
| ENERGY ONE vs. Sims Metal Management | ENERGY ONE vs. CeoTronics AG | ENERGY ONE vs. Cleanaway Waste Management | ENERGY ONE vs. SLR Investment Corp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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