Correlation Between Caldwell Partners and TomCo Energy

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

By analyzing existing cross correlation between The Caldwell Partners and TomCo Energy Plc, you can compare the effects of market volatilities on Caldwell Partners and TomCo 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 Caldwell Partners with a short position of TomCo Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caldwell Partners and TomCo Energy.

Diversification Opportunities for Caldwell Partners and TomCo Energy

-0.08

Correlation Coefficient

Caldwell Partners TomCo Energy

Good diversification

The 3 months correlation between Caldwell and TomCo is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding The Caldwell Partners and TomCo Energy Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TomCo Energy Plc and Caldwell Partners 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 The Caldwell Partners are associated (or correlated) with TomCo Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TomCo Energy Plc has no effect on the direction of Caldwell Partners i.e., Caldwell Partners and TomCo Energy go up and down completely randomly.

Pair Corralation between Caldwell Partners and TomCo Energy

Assuming the 90 days horizon The Caldwell Partners is expected to under-perform the TomCo Energy. But the otc stock apears to be less risky and, when comparing its historical volatility, The Caldwell Partners is 27.17 times less risky than TomCo Energy. The otc stock trades about -0.4 of its potential returns per unit of risk. The TomCo Energy Plc is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  0.16  in TomCo Energy Plc on December 27, 2022 and sell it today you would earn a total of  0.52  from holding TomCo Energy Plc or generate 325.0% return on investment over 90 days.

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

The Caldwell Partners  vs.  TomCo Energy Plc

Caldwell Partners

Caldwell Performance

0 of 100

Over the last 90 days The Caldwell Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2023. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

TomCo Energy Plc

TomCo Performance

9 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in TomCo Energy Plc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, TomCo Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Caldwell Partners and TomCo Energy

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

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The idea behind The Caldwell Partners and TomCo Energy Plc 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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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.