Correlation Between Parex Resources and Hess
Can any of the company-specific risk be diversified away by investing in both Parex Resources and Hess 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 Parex Resources and Hess into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parex Resources and Hess Corporation, you can compare the effects of market volatilities on Parex Resources and Hess 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 Parex Resources with a short position of Hess. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parex Resources and Hess.
Diversification Opportunities for Parex Resources and Hess
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Parex and Hess is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Parex Resources and Hess Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hess and Parex Resources 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 Parex Resources are associated (or correlated) with Hess. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hess has no effect on the direction of Parex Resources i.e., Parex Resources and Hess go up and down completely randomly.
Pair Corralation between Parex Resources and Hess
Assuming the 90 days horizon Parex Resources is expected to generate 1.77 times less return on investment than Hess. In addition to that, Parex Resources is 1.37 times more volatile than Hess Corporation. It trades about 0.05 of its total potential returns per unit of risk. Hess Corporation is currently generating about 0.13 per unit of volatility. If you would invest 13,738 in Hess Corporation on January 20, 2024 and sell it today you would earn a total of 1,440 from holding Hess Corporation or generate 10.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parex Resources vs. Hess Corp.
Performance |
| Timeline |
| Parex Resources |
| Hess |
Parex Resources and Hess Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parex Resources and Hess
The main advantage of trading using opposite Parex Resources and Hess positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parex Resources position performs unexpectedly, Hess 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 Hess will offset losses from the drop in Hess' long position.| Parex Resources vs. Petro Viking Energy | Parex Resources vs. Surge Energy | Parex Resources vs. Razor Energy Corp | Parex Resources vs. Prospera Energy |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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