Correlation Between Rubicon Water and Beach Energy

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

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

Diversification Opportunities for Rubicon Water and Beach Energy

0.01

Correlation Coefficient

Rubicon Water  Beach Energy

Significant diversification

The 3 months correlation between Rubicon and Beach is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Rubicon Water and Beach Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beach Energy and Rubicon Water 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 Rubicon Water are associated (or correlated) with Beach Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beach Energy has no effect on the direction of Rubicon Water i.e., Rubicon Water and Beach Energy go up and down completely randomly.

Pair Corralation between Rubicon Water and Beach Energy

Assuming the 90 days trading horizon Rubicon Water is expected to under-perform the Beach Energy. In addition to that, Rubicon Water is 1.67 times more volatile than Beach Energy. It trades about -0.05 of its total potential returns per unit of risk. Beach Energy is currently generating about 0.0 per unit of volatility. If you would invest  152.00  in Beach Energy on October 4, 2024 and sell it today you would lose (12.00) from holding Beach Energy or give up 7.89% of portfolio value over 90 days.

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

Rubicon Water  vs.  Beach Energy

Rubicon Water

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rubicon Water are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Rubicon Water unveiled solid returns over the last few months and may actually be approaching a breakup point.

Beach Energy

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Beach Energy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Beach Energy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Rubicon Water and Beach Energy

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

The idea behind Rubicon Water and Beach 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.

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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.