Correlation Between Pioneer Natural and Ngx Energy

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

By analyzing existing cross correlation between Pioneer Natural Resources and Ngx Energy International, you can compare the effects of market volatilities on Pioneer Natural and Ngx 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 Pioneer Natural with a short position of Ngx Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pioneer Natural and Ngx Energy.

Diversification Opportunities for Pioneer Natural and Ngx Energy

0.63

Correlation Coefficient

Pioneer Natural  Ngx Energy

Poor diversification

The 3 months correlation between Pioneer and Ngx is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Pioneer Natural Resources and Ngx Energy International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ngx Energy International and Pioneer Natural 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 Pioneer Natural Resources are associated (or correlated) with Ngx Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ngx Energy International has no effect on the direction of Pioneer Natural i.e., Pioneer Natural and Ngx Energy go up and down completely randomly.

Pair Corralation between Pioneer Natural and Ngx Energy

Considering the 90-day investment horizon Pioneer Natural is expected to generate 13.34 times less return on investment than Ngx Energy. But when comparing it to its historical volatility, Pioneer Natural Resources is 2.88 times less risky than Ngx Energy. It trades about 0.01 of its potential returns per unit of risk. Ngx Energy International is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  63.00  in Ngx Energy International on October 9, 2024 and sell it today you would earn a total of  16.00  from holding Ngx Energy International or generate 25.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	28.43%
Values	Daily Returns

Pioneer Natural Resources  vs.  Ngx Energy International

Pioneer Natural Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pioneer Natural Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Pioneer Natural is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Ngx Energy International

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ngx Energy International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ngx Energy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Pioneer Natural and Ngx Energy

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

The idea behind Pioneer Natural Resources and Ngx Energy International 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..