Correlation Between ExGen Resources and Eastfield Resources

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

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

Diversification Opportunities for ExGen Resources and Eastfield Resources

0.0

Correlation Coefficient

ExGen Resources  Eastfield Resources

Pay attention - limited upside

The 3 months correlation between ExGen and Eastfield is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ExGen Resources and Eastfield Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastfield Resources and ExGen Resources 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 ExGen Resources are associated (or correlated) with Eastfield Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastfield Resources has no effect on the direction of ExGen Resources i.e., ExGen Resources and Eastfield Resources go up and down completely randomly.

Pair Corralation between ExGen Resources and Eastfield Resources

Assuming the 90 days horizon ExGen Resources is expected to generate 1.6 times less return on investment than Eastfield Resources. But when comparing it to its historical volatility, ExGen Resources is 1.1 times less risky than Eastfield Resources. It trades about 0.04 of its potential returns per unit of risk. Eastfield Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Eastfield Resources on October 23, 2024 and sell it today you would lose (1.00) from holding Eastfield Resources or give up 25.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

ExGen Resources  vs.  Eastfield Resources

ExGen Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ExGen Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, ExGen Resources is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Eastfield Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastfield Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Eastfield Resources is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with ExGen Resources and Eastfield Resources

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

The idea behind ExGen Resources and Eastfield Resources 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.