Correlation Between Pampa Energia and DXP Enterprises
Can any of the company-specific risk be diversified away by investing in both Pampa Energia and DXP Enterprises 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 Pampa Energia and DXP Enterprises into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pampa Energia SA and DXP Enterprises, you can compare the effects of market volatilities on Pampa Energia and DXP Enterprises 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 Pampa Energia with a short position of DXP Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pampa Energia and DXP Enterprises.
Diversification Opportunities for Pampa Energia and DXP Enterprises
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pampa and DXP is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Pampa Energia SA and DXP Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXP Enterprises and Pampa Energia 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 Pampa Energia SA are associated (or correlated) with DXP Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DXP Enterprises has no effect on the direction of Pampa Energia i.e., Pampa Energia and DXP Enterprises go up and down completely randomly.
Pair Corralation between Pampa Energia and DXP Enterprises
Considering the 90-day investment horizon Pampa Energia SA is expected to generate 1.7 times more return on investment than DXP Enterprises. However, Pampa Energia is 1.7 times more volatile than DXP Enterprises. It trades about 0.13 of its potential returns per unit of risk. DXP Enterprises is currently generating about -0.02 per unit of risk. If you would invest 4,283 in Pampa Energia SA on January 24, 2024 and sell it today you would earn a total of 342.00 from holding Pampa Energia SA or generate 7.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pampa Energia SA vs. DXP Enterprises
Performance |
| Timeline |
| Pampa Energia SA |
| DXP Enterprises |
Pampa Energia and DXP Enterprises Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pampa Energia and DXP Enterprises
The main advantage of trading using opposite Pampa Energia and DXP Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pampa Energia position performs unexpectedly, DXP Enterprises 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 DXP Enterprises will offset losses from the drop in DXP Enterprises' long position.| Pampa Energia vs. Grupo Financiero Galicia | Pampa Energia vs. Banco Macro SA | Pampa Energia vs. Empresa Distribuidora y | Pampa Energia vs. Transportadora de Gas |
| DXP Enterprises vs. Global Industrial Co | DXP Enterprises vs. EVI Industries | DXP Enterprises vs. Core Main | DXP Enterprises vs. Distribution Solutions Group |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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