Correlation Between Invictus Energy and Spindletop

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

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

Diversification Opportunities for Invictus Energy and Spindletop

0.57

Correlation Coefficient

Invictus Energy  Spindletop

Very weak diversification

The 3 months correlation between Invictus and Spindletop is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Invictus Energy Limited and Spindletop OG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spindletop OG and Invictus 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 Invictus Energy Limited are associated (or correlated) with Spindletop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spindletop OG has no effect on the direction of Invictus Energy i.e., Invictus Energy and Spindletop go up and down completely randomly.

Pair Corralation between Invictus Energy and Spindletop

Assuming the 90 days horizon Invictus Energy Limited is expected to generate 1.69 times more return on investment than Spindletop. However, Invictus Energy is 1.69 times more volatile than Spindletop OG. It trades about 0.01 of its potential returns per unit of risk. Spindletop OG is currently generating about 0.0 per unit of risk. If you would invest  13.00  in Invictus Energy Limited on September 23, 2024 and sell it today you would lose (9.10) from holding Invictus Energy Limited or give up 70.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Invictus Energy Limited  vs.  Spindletop OG

Invictus Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invictus Energy Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Spindletop OG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spindletop OG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Invictus Energy and Spindletop

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

The idea behind Invictus Energy Limited and Spindletop OG 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.