Correlation Between Tiger Oil and Magellan Energy

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

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

Diversification Opportunities for Tiger Oil and Magellan Energy

0.02

Correlation Coefficient

Tiger Oil  Magellan Energy

Significant diversification

The 3 months correlation between Tiger and Magellan is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Tiger Oil And and Magellan Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magellan Energy and Tiger Oil 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 Tiger Oil And are associated (or correlated) with Magellan Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magellan Energy has no effect on the direction of Tiger Oil i.e., Tiger Oil and Magellan Energy go up and down completely randomly.

Pair Corralation between Tiger Oil and Magellan Energy

If you would invest  0.00  in Magellan Energy on October 26, 2024 and sell it today you would earn a total of  0.00  from holding Magellan Energy or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Tiger Oil And  vs.  Magellan Energy

Tiger Oil And

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tiger Oil And are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Tiger Oil displayed solid returns over the last few months and may actually be approaching a breakup point.

Magellan Energy

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Magellan Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Magellan 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 Tiger Oil and Magellan Energy

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

The idea behind Tiger Oil And and Magellan 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.