Correlation Between Cardinal Energy and Crew Energy

Can any of the company-specific risk be diversified away by investing in both Cardinal Energy and Crew 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 Cardinal Energy and Crew Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cardinal Energy and Crew Energy, you can compare the effects of market volatilities on Cardinal Energy and Crew 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 Cardinal Energy with a short position of Crew Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Energy and Crew Energy.

Diversification Opportunities for Cardinal Energy and Crew Energy

0.52

Correlation Coefficient

Cardinal Energy  Crew Energy

Very weak diversification

The 3 months correlation between Cardinal and Crew is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Energy and Crew Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crew Energy and Cardinal 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 Cardinal Energy are associated (or correlated) with Crew Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crew Energy has no effect on the direction of Cardinal Energy i.e., Cardinal Energy and Crew Energy go up and down completely randomly.

Pair Corralation between Cardinal Energy and Crew Energy

Assuming the 90 days horizon Cardinal Energy is expected to generate 0.72 times more return on investment than Crew Energy. However, Cardinal Energy is 1.39 times less risky than Crew Energy. It trades about 0.05 of its potential returns per unit of risk. Crew Energy is currently generating about 0.0 per unit of risk. If you would invest  591.00  in Cardinal Energy on February 8, 2024 and sell it today you would earn a total of  106.00  from holding Cardinal Energy or generate 17.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Cardinal Energy  vs.  Crew Energy

Cardinal Energy

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Energy are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Cardinal Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Crew Energy

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Crew Energy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Crew Energy may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Cardinal Energy and Crew Energy

The main advantage of trading using opposite Cardinal Energy and Crew Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Energy position performs unexpectedly, Crew 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 Crew Energy will offset losses from the drop in Crew Energy's long position.

The idea behind Cardinal Energy and Crew Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.