Correlation Between E Split and Lucero Energy

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

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

Diversification Opportunities for E Split and Lucero Energy

-0.67

Correlation Coefficient

E Split  Lucero Energy

Excellent diversification

The 3 months correlation between ENS-PA and Lucero is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding E Split Corp and Lucero Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucero Energy Corp and E Split 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 E Split Corp are associated (or correlated) with Lucero Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucero Energy Corp has no effect on the direction of E Split i.e., E Split and Lucero Energy go up and down completely randomly.

Pair Corralation between E Split and Lucero Energy

Assuming the 90 days trading horizon E Split Corp is expected to generate 0.22 times more return on investment than Lucero Energy. However, E Split Corp is 4.45 times less risky than Lucero Energy. It trades about 0.15 of its potential returns per unit of risk. Lucero Energy Corp is currently generating about -0.03 per unit of risk. If you would invest  919.00  in E Split Corp on September 14, 2024 and sell it today you would earn a total of  187.00  from holding E Split Corp or generate 20.35% return on investment over 90 days.

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

E Split Corp  vs.  Lucero Energy Corp

E Split Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in E Split Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, E Split is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Lucero Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lucero Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with E Split and Lucero Energy

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

The idea behind E Split Corp and Lucero Energy Corp 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.