Correlation Between Crew Energy and Journey Energy

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

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

Diversification Opportunities for Crew Energy and Journey Energy

-0.58

Correlation Coefficient

Crew Energy  Journey Energy

Excellent diversification

The 3 months correlation between Crew and Journey is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Crew Energy and Journey Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Journey Energy and Crew 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 Crew Energy are associated (or correlated) with Journey Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Journey Energy has no effect on the direction of Crew Energy i.e., Crew Energy and Journey Energy go up and down completely randomly.

Pair Corralation between Crew Energy and Journey Energy

Assuming the 90 days horizon Crew Energy is expected to generate 0.53 times more return on investment than Journey Energy. However, Crew Energy is 1.88 times less risky than Journey Energy. It trades about 0.32 of its potential returns per unit of risk. Journey Energy is currently generating about -0.07 per unit of risk. If you would invest  496.00  in Crew Energy on August 31, 2024 and sell it today you would earn a total of  55.00  from holding Crew Energy or generate 11.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	37.5%
Values	Daily Returns

Crew Energy  vs.  Journey Energy

Crew Energy

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Crew Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile technical and fundamental indicators, Crew Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Journey Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Journey Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Crew Energy and Journey Energy

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

The idea behind Crew Energy and Journey 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.