Correlation Between National Energy and PAVmed Series

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

By analyzing existing cross correlation between National Energy Services and PAVmed Series Z, you can compare the effects of market volatilities on National Energy and PAVmed Series 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 National Energy with a short position of PAVmed Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Energy and PAVmed Series.

Diversification Opportunities for National Energy and PAVmed Series

0.53

Correlation Coefficient

National Energy  PAVmed Series

Very weak diversification

The 3 months correlation between National and PAVmed is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding National Energy Services and PAVmed Series Z in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PAVmed Series Z and National 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 National Energy Services are associated (or correlated) with PAVmed Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PAVmed Series Z has no effect on the direction of National Energy i.e., National Energy and PAVmed Series go up and down completely randomly.

Pair Corralation between National Energy and PAVmed Series

Assuming the 90 days horizon National Energy is expected to generate 8.08 times less return on investment than PAVmed Series. But when comparing it to its historical volatility, National Energy Services is 3.12 times less risky than PAVmed Series. It trades about 0.04 of its potential returns per unit of risk. PAVmed Series Z is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.99  in PAVmed Series Z on December 30, 2024 and sell it today you would lose (0.43) from holding PAVmed Series Z or give up 43.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.08%
Values	Daily Returns

National Energy Services  vs.  PAVmed Series Z

National Energy Services

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in National Energy Services are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, National Energy showed solid returns over the last few months and may actually be approaching a breakup point.

PAVmed Series Z

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PAVmed Series Z are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, PAVmed Series showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Energy and PAVmed Series

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

The idea behind National Energy Services and PAVmed Series Z 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..