Correlation Between Genel Energy and MRC Global
Can any of the company-specific risk be diversified away by investing in both Genel Energy and MRC Global 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 Genel Energy and MRC Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genel Energy plc and MRC Global, you can compare the effects of market volatilities on Genel Energy and MRC Global 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 Genel Energy with a short position of MRC Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genel Energy and MRC Global.
Diversification Opportunities for Genel Energy and MRC Global
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Genel and MRC is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Genel Energy plc and MRC Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MRC Global and Genel 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 Genel Energy plc are associated (or correlated) with MRC Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MRC Global has no effect on the direction of Genel Energy i.e., Genel Energy and MRC Global go up and down completely randomly.
Pair Corralation between Genel Energy and MRC Global
Assuming the 90 days horizon Genel Energy plc is expected to under-perform the MRC Global. In addition to that, Genel Energy is 2.8 times more volatile than MRC Global. It trades about -0.22 of its total potential returns per unit of risk. MRC Global is currently generating about -0.11 per unit of volatility. If you would invest 1,307 in MRC Global on June 29, 2024 and sell it today you would lose (58.00) from holding MRC Global or give up 4.44% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.45% |
Values | Daily Returns |
Genel Energy plc vs. MRC Global
Performance |
Timeline |
Genel Energy plc |
MRC Global |
Genel Energy and MRC Global Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Genel Energy and MRC Global
The main advantage of trading using opposite Genel Energy and MRC Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genel Energy position performs unexpectedly, MRC Global 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 MRC Global will offset losses from the drop in MRC Global's long position.Genel Energy vs. MV Oil Trust | Genel Energy vs. North European Oil | Genel Energy vs. Permianville Royalty Trust | Genel Energy vs. Cross Timbers Royalty |
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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 the CEOs Directory module to screen CEOs from public companies around the world.
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