Correlation Between Rubellite Energy and Lucero Energy

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

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

Diversification Opportunities for Rubellite Energy and Lucero Energy

0.36

Correlation Coefficient

Rubellite Energy  Lucero Energy

Weak diversification

The 3 months correlation between Rubellite and Lucero is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Rubellite Energy and Lucero Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucero Energy Corp and Rubellite 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 Rubellite Energy are associated (or correlated) with Lucero Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucero Energy Corp has no effect on the direction of Rubellite Energy i.e., Rubellite Energy and Lucero Energy go up and down completely randomly.

Pair Corralation between Rubellite Energy and Lucero Energy

Assuming the 90 days trading horizon Rubellite Energy is expected to generate 1.12 times more return on investment than Lucero Energy. However, Rubellite Energy is 1.12 times more volatile than Lucero Energy Corp. It trades about 0.02 of its potential returns per unit of risk. Lucero Energy Corp is currently generating about 0.01 per unit of risk. If you would invest  172.00  in Rubellite Energy on September 15, 2024 and sell it today you would earn a total of  21.00  from holding Rubellite Energy or generate 12.21% return on investment over 90 days.

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

Rubellite Energy  vs.  Lucero Energy Corp

Rubellite Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rubellite Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Lucero Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lucero Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Lucero Energy is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Rubellite Energy and Lucero Energy

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

The idea behind Rubellite Energy and Lucero Energy Corp 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.