Correlation Between Mexco Energy and XXL Energy
Can any of the company-specific risk be diversified away by investing in both Mexco Energy and XXL 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 Mexco Energy and XXL Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mexco Energy and XXL Energy Corp, you can compare the effects of market volatilities on Mexco Energy and XXL 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 Mexco Energy with a short position of XXL Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mexco Energy and XXL Energy.
Diversification Opportunities for Mexco Energy and XXL Energy
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mexco and XXL is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Mexco Energy and XXL Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XXL Energy Corp and Mexco 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 Mexco Energy are associated (or correlated) with XXL Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XXL Energy Corp has no effect on the direction of Mexco Energy i.e., Mexco Energy and XXL Energy go up and down completely randomly.
Pair Corralation between Mexco Energy and XXL Energy
Considering the 90-day investment horizon Mexco Energy is expected to generate 0.42 times more return on investment than XXL Energy. However, Mexco Energy is 2.36 times less risky than XXL Energy. It trades about 0.02 of its potential returns per unit of risk. XXL Energy Corp is currently generating about -0.09 per unit of risk. If you would invest 1,110 in Mexco Energy on September 12, 2024 and sell it today you would earn a total of 16.00 from holding Mexco Energy or generate 1.44% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 99.2% |
Values | Daily Returns |
Mexco Energy vs. XXL Energy Corp
Performance |
Timeline |
Mexco Energy |
XXL Energy Corp |
Mexco Energy and XXL Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mexco Energy and XXL Energy
The main advantage of trading using opposite Mexco Energy and XXL Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mexco Energy position performs unexpectedly, XXL 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 XXL Energy will offset losses from the drop in XXL Energy's long position.Mexco Energy vs. PHX Minerals | Mexco Energy vs. Granite Ridge Resources | Mexco Energy vs. XXL Energy Corp | Mexco Energy vs. Permianville Royalty Trust |
XXL Energy vs. POSCO Holdings | XXL Energy vs. Schweizerische Nationalbank | XXL Energy vs. Berkshire Hathaway | XXL Energy vs. Berkshire Hathaway |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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