Correlation Between ALL ENERGY and NAT ABSOLUTE

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

By analyzing existing cross correlation between ALL ENERGY UTILITIES and NAT ABSOLUTE TECHNOLOGIES, you can compare the effects of market volatilities on ALL ENERGY and NAT ABSOLUTE 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 ALL ENERGY with a short position of NAT ABSOLUTE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALL ENERGY and NAT ABSOLUTE.

Diversification Opportunities for ALL ENERGY and NAT ABSOLUTE

0.76

Correlation Coefficient

ALL ENERGY  NAT ABSOLUTE

Poor diversification

The 3 months correlation between ALL and NAT is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding ALL ENERGY UTILITIES and NAT ABSOLUTE TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAT ABSOLUTE TECHNOLOGIES and ALL 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 ALL ENERGY UTILITIES are associated (or correlated) with NAT ABSOLUTE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAT ABSOLUTE TECHNOLOGIES has no effect on the direction of ALL ENERGY i.e., ALL ENERGY and NAT ABSOLUTE go up and down completely randomly.

Pair Corralation between ALL ENERGY and NAT ABSOLUTE

Assuming the 90 days horizon ALL ENERGY UTILITIES is expected to generate 2.18 times more return on investment than NAT ABSOLUTE. However, ALL ENERGY is 2.18 times more volatile than NAT ABSOLUTE TECHNOLOGIES. It trades about 0.06 of its potential returns per unit of risk. NAT ABSOLUTE TECHNOLOGIES is currently generating about -0.08 per unit of risk. If you would invest  18.00  in ALL ENERGY UTILITIES on September 1, 2024 and sell it today you would earn a total of  2.00  from holding ALL ENERGY UTILITIES or generate 11.11% return on investment over 90 days.

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

ALL ENERGY UTILITIES  vs.  NAT ABSOLUTE TECHNOLOGIES

ALL ENERGY UTILITIES

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ALL ENERGY UTILITIES are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, ALL ENERGY disclosed solid returns over the last few months and may actually be approaching a breakup point.

NAT ABSOLUTE TECHNOLOGIES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NAT ABSOLUTE TECHNOLOGIES has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with ALL ENERGY and NAT ABSOLUTE

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

The idea behind ALL ENERGY UTILITIES and NAT ABSOLUTE TECHNOLOGIES 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.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.