Correlation Between NESNVX and Par Pacific

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

By analyzing existing cross correlation between NESNVX 43 01 OCT 32 and Par Pacific Holdings, you can compare the effects of market volatilities on NESNVX and Par Pacific 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 NESNVX with a short position of Par Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of NESNVX and Par Pacific.

Diversification Opportunities for NESNVX and Par Pacific

-0.21

Correlation Coefficient

NESNVX  Par Pacific

Very good diversification

The 3 months correlation between NESNVX and Par is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding NESNVX 43 01 OCT 32 and Par Pacific Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Par Pacific Holdings and NESNVX 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 NESNVX 43 01 OCT 32 are associated (or correlated) with Par Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Par Pacific Holdings has no effect on the direction of NESNVX i.e., NESNVX and Par Pacific go up and down completely randomly.

Pair Corralation between NESNVX and Par Pacific

Assuming the 90 days trading horizon NESNVX 43 01 OCT 32 is expected to generate 0.43 times more return on investment than Par Pacific. However, NESNVX 43 01 OCT 32 is 2.33 times less risky than Par Pacific. It trades about -0.02 of its potential returns per unit of risk. Par Pacific Holdings is currently generating about -0.03 per unit of risk. If you would invest  10,063  in NESNVX 43 01 OCT 32 on September 26, 2024 and sell it today you would lose (437.00) from holding NESNVX 43 01 OCT 32 or give up 4.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	41.26%
Values	Daily Returns

NESNVX 43 01 OCT 32  vs.  Par Pacific Holdings

NESNVX 43 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NESNVX 43 01 OCT 32 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for NESNVX 43 01 OCT 32 investors.

Par Pacific Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Par Pacific Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Par Pacific is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with NESNVX and Par Pacific

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

The idea behind NESNVX 43 01 OCT 32 and Par Pacific Holdings 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.