Correlation Between Navigator Global and 88 Energy

Can any of the company-specific risk be diversified away by investing in both Navigator Global and 88 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 Navigator Global and 88 Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Navigator Global Investments and 88 Energy, you can compare the effects of market volatilities on Navigator Global and 88 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 Navigator Global with a short position of 88 Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Navigator Global and 88 Energy.

Diversification Opportunities for Navigator Global and 88 Energy

-0.3

Correlation Coefficient

Navigator Global  88 Energy

Very good diversification

The 3 months correlation between Navigator and 88E is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Navigator Global Investments and 88 Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 88 Energy and Navigator Global 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 Navigator Global Investments are associated (or correlated) with 88 Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 88 Energy has no effect on the direction of Navigator Global i.e., Navigator Global and 88 Energy go up and down completely randomly.

Pair Corralation between Navigator Global and 88 Energy

Assuming the 90 days trading horizon Navigator Global is expected to generate 56.52 times less return on investment than 88 Energy. But when comparing it to its historical volatility, Navigator Global Investments is 13.8 times less risky than 88 Energy. It trades about 0.04 of its potential returns per unit of risk. 88 Energy is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  0.20  in 88 Energy on December 30, 2024 and sell it today you would lose (0.05) from holding 88 Energy or give up 25.0% of portfolio value over 90 days.

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

Navigator Global Investments  vs.  88 Energy

Navigator Global Inv

Risk-Adjusted Performance

Insignificant

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

88 Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in 88 Energy are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, 88 Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Navigator Global and 88 Energy

The main advantage of trading using opposite Navigator Global and 88 Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Navigator Global position performs unexpectedly, 88 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 88 Energy will offset losses from the drop in 88 Energy's long position.

The idea behind Navigator Global Investments and 88 Energy 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.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.