Correlation Between MDM Permian and KYN Capital
Can any of the company-specific risk be diversified away by investing in both MDM Permian and KYN Capital 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 MDM Permian and KYN Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MDM Permian and KYN Capital Group, you can compare the effects of market volatilities on MDM Permian and KYN Capital 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 MDM Permian with a short position of KYN Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of MDM Permian and KYN Capital.
Diversification Opportunities for MDM Permian and KYN Capital
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between MDM and KYN is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding MDM Permian and KYN Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KYN Capital Group and MDM Permian 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 MDM Permian are associated (or correlated) with KYN Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KYN Capital Group has no effect on the direction of MDM Permian i.e., MDM Permian and KYN Capital go up and down completely randomly.
Pair Corralation between MDM Permian and KYN Capital
Given the investment horizon of 90 days MDM Permian is expected to generate 1.16 times less return on investment than KYN Capital. But when comparing it to its historical volatility, MDM Permian is 1.28 times less risky than KYN Capital. It trades about 0.07 of its potential returns per unit of risk. KYN Capital Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 0.07 in KYN Capital Group on November 30, 2024 and sell it today you would lose (0.01) from holding KYN Capital Group or give up 14.29% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.33% |
Values | Daily Returns |
MDM Permian vs. KYN Capital Group
Performance |
Timeline |
MDM Permian |
KYN Capital Group |
MDM Permian and KYN Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with MDM Permian and KYN Capital
The main advantage of trading using opposite MDM Permian and KYN Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MDM Permian position performs unexpectedly, KYN Capital 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 KYN Capital will offset losses from the drop in KYN Capital's long position.MDM Permian vs. Saturn Oil Gas | MDM Permian vs. MMEX Resources Corp | MDM Permian vs. Razor Energy Corp | MDM Permian vs. San Leon Energy |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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