Correlation Between Reconnaissance Energy and Ssga Sp

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

By analyzing existing cross correlation between Reconnaissance Energy Africa and Ssga Sp 500, you can compare the effects of market volatilities on Reconnaissance Energy and Ssga Sp 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 Reconnaissance Energy with a short position of Ssga Sp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reconnaissance Energy and Ssga Sp.

Diversification Opportunities for Reconnaissance Energy and Ssga Sp

-0.27

Correlation Coefficient

Reconnaissance Energy  Ssga Sp

Very good diversification

The 3 months correlation between Reconnaissance and Ssga is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Reconnaissance Energy Africa and Ssga Sp 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ssga Sp 500 and Reconnaissance Energy 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 Reconnaissance Energy Africa are associated (or correlated) with Ssga Sp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ssga Sp 500 has no effect on the direction of Reconnaissance Energy i.e., Reconnaissance Energy and Ssga Sp go up and down completely randomly.

Pair Corralation between Reconnaissance Energy and Ssga Sp

Assuming the 90 days horizon Reconnaissance Energy Africa is expected to under-perform the Ssga Sp. In addition to that, Reconnaissance Energy is 5.75 times more volatile than Ssga Sp 500. It trades about -0.06 of its total potential returns per unit of risk. Ssga Sp 500 is currently generating about 0.07 per unit of volatility. If you would invest  22,955  in Ssga Sp 500 on January 24, 2024 and sell it today you would earn a total of  746.00  from holding Ssga Sp 500 or generate 3.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Reconnaissance Energy Africa  vs.  Ssga Sp 500

Reconnaissance Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Reconnaissance Energy Africa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Ssga Sp 500

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ssga Sp 500 are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ssga Sp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Reconnaissance Energy and Ssga Sp

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

The idea behind Reconnaissance Energy Africa and Ssga Sp 500 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.