Correlation Between Total Helium and Permian Resources

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

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

Diversification Opportunities for Total Helium and Permian Resources

-0.07

Correlation Coefficient

Total Helium  Permian Resources

Good diversification

The 3 months correlation between Total and Permian is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Total Helium and Permian Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Permian Resources and Total Helium 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 Total Helium are associated (or correlated) with Permian Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Permian Resources has no effect on the direction of Total Helium i.e., Total Helium and Permian Resources go up and down completely randomly.

Pair Corralation between Total Helium and Permian Resources

Assuming the 90 days horizon Total Helium is expected to under-perform the Permian Resources. In addition to that, Total Helium is 5.24 times more volatile than Permian Resources. It trades about -0.02 of its total potential returns per unit of risk. Permian Resources is currently generating about -0.03 per unit of volatility. If you would invest  1,504  in Permian Resources on September 13, 2024 and sell it today you would lose (27.00) from holding Permian Resources or give up 1.8% of portfolio value over 90 days.

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

Total Helium  vs.  Permian Resources

Total Helium

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Total Helium are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, Total Helium reported solid returns over the last few months and may actually be approaching a breakup point.

Permian Resources

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Permian Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Permian Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Total Helium and Permian Resources

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

The idea behind Total Helium and Permian Resources 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.