Correlation Between Energy Select and Immatics

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

By analyzing existing cross correlation between Energy Select Sector and Immatics NV, you can compare the effects of market volatilities on Energy Select and Immatics 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 Energy Select with a short position of Immatics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Select and Immatics.

Diversification Opportunities for Energy Select and Immatics

-0.54

Correlation Coefficient

Energy Select  Immatics

Excellent diversification

The 3 months correlation between Energy and Immatics is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Energy Select Sector and Immatics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Immatics NV and Energy Select 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 Energy Select Sector are associated (or correlated) with Immatics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Immatics NV has no effect on the direction of Energy Select i.e., Energy Select and Immatics go up and down completely randomly.

Pair Corralation between Energy Select and Immatics

Considering the 90-day investment horizon Energy Select Sector is expected to generate 0.35 times more return on investment than Immatics. However, Energy Select Sector is 2.83 times less risky than Immatics. It trades about 0.14 of its potential returns per unit of risk. Immatics NV is currently generating about -0.16 per unit of risk. If you would invest  9,326  in Energy Select Sector on January 24, 2024 and sell it today you would earn a total of  233.00  from holding Energy Select Sector or generate 2.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Energy Select Sector  vs.  Immatics NV

Energy Select Sector

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Select Sector are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, Energy Select exhibited solid returns over the last few months and may actually be approaching a breakup point.

Immatics NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Immatics NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Energy Select and Immatics

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

The idea behind Energy Select Sector and Immatics NV 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.