Correlation Between Permianville Royalty and Genel Energy

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

By analyzing existing cross correlation between Permianville Royalty Trust and Genel Energy plc, you can compare the effects of market volatilities on Permianville Royalty and Genel 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 Permianville Royalty with a short position of Genel Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Permianville Royalty and Genel Energy.

Diversification Opportunities for Permianville Royalty and Genel Energy

0.38

Correlation Coefficient

Permianville Royalty  Genel Energy

Weak diversification

The 3 months correlation between Permianville and Genel is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Permianville Royalty Trust and Genel Energy plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genel Energy plc and Permianville Royalty 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 Permianville Royalty Trust are associated (or correlated) with Genel Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genel Energy plc has no effect on the direction of Permianville Royalty i.e., Permianville Royalty and Genel Energy go up and down completely randomly.

Pair Corralation between Permianville Royalty and Genel Energy

Considering the 90-day investment horizon Permianville Royalty Trust is expected to generate 0.96 times more return on investment than Genel Energy. However, Permianville Royalty Trust is 1.04 times less risky than Genel Energy. It trades about 0.13 of its potential returns per unit of risk. Genel Energy plc is currently generating about 0.04 per unit of risk. If you would invest  136.00  in Permianville Royalty Trust on December 21, 2024 and sell it today you would earn a total of  20.00  from holding Permianville Royalty Trust or generate 14.71% return on investment over 90 days.

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

Permianville Royalty Trust  vs.  Genel Energy plc

Permianville Royalty

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Permianville Royalty Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Permianville Royalty disclosed solid returns over the last few months and may actually be approaching a breakup point.

Genel Energy plc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Genel Energy plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Genel Energy is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Permianville Royalty and Genel Energy

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

The idea behind Permianville Royalty Trust and Genel Energy plc 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.