Correlation Between Kip McGrath and Boss Energy

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

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

Diversification Opportunities for Kip McGrath and Boss Energy

-0.63

Correlation Coefficient

Kip McGrath  Boss Energy

Excellent diversification

The 3 months correlation between Kip and Boss is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Kip McGrath Education and Boss Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boss Energy Limited and Kip McGrath 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 Kip McGrath Education are associated (or correlated) with Boss Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boss Energy Limited has no effect on the direction of Kip McGrath i.e., Kip McGrath and Boss Energy go up and down completely randomly.

Pair Corralation between Kip McGrath and Boss Energy

Assuming the 90 days trading horizon Kip McGrath Education is expected to under-perform the Boss Energy. But the stock apears to be less risky and, when comparing its historical volatility, Kip McGrath Education is 2.1 times less risky than Boss Energy. The stock trades about -0.01 of its potential returns per unit of risk. The Boss Energy Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  227.00  in Boss Energy Limited on December 19, 2024 and sell it today you would earn a total of  14.00  from holding Boss Energy Limited or generate 6.17% return on investment over 90 days.

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

Kip McGrath Education  vs.  Boss Energy Limited

Kip McGrath Education

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kip McGrath Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Kip McGrath is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Boss Energy Limited

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Boss Energy Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Boss Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Kip McGrath and Boss Energy

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

The idea behind Kip McGrath Education and Boss Energy Limited 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.