Correlation Between Mirage Energy and Dynagas LNG

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

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

Diversification Opportunities for Mirage Energy and Dynagas LNG

0.03

Correlation Coefficient

Mirage Energy  Dynagas LNG

Significant diversification

The 3 months correlation between Mirage and Dynagas is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Mirage Energy Corp and Dynagas LNG Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynagas LNG Partners and Mirage 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 Mirage Energy Corp are associated (or correlated) with Dynagas LNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynagas LNG Partners has no effect on the direction of Mirage Energy i.e., Mirage Energy and Dynagas LNG go up and down completely randomly.

Pair Corralation between Mirage Energy and Dynagas LNG

Given the investment horizon of 90 days Mirage Energy Corp is expected to generate 46.46 times more return on investment than Dynagas LNG. However, Mirage Energy is 46.46 times more volatile than Dynagas LNG Partners. It trades about 0.22 of its potential returns per unit of risk. Dynagas LNG Partners is currently generating about 0.21 per unit of risk. If you would invest  0.50  in Mirage Energy Corp on October 2, 2024 and sell it today you would earn a total of  0.17  from holding Mirage Energy Corp or generate 34.0% return on investment over 90 days.

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

Mirage Energy Corp  vs.  Dynagas LNG Partners

Mirage Energy Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mirage Energy Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Mirage Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Dynagas LNG Partners

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dynagas LNG Partners are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Dynagas LNG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mirage Energy and Dynagas LNG

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

The idea behind Mirage Energy Corp and Dynagas LNG Partners 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.