Correlation Between Genel Energy and Wex

Can any of the company-specific risk be diversified away by investing in both Genel Energy and Wex 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 Wex 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 Wex Inc, you can compare the effects of market volatilities on Genel Energy and Wex 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 Wex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genel Energy and Wex.

Diversification Opportunities for Genel Energy and Wex

-0.4

Correlation Coefficient

Genel Energy  Wex

Very good diversification

The 3 months correlation between Genel and Wex is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Genel Energy plc and Wex Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wex Inc 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 Wex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wex Inc has no effect on the direction of Genel Energy i.e., Genel Energy and Wex go up and down completely randomly.

Pair Corralation between Genel Energy and Wex

Assuming the 90 days horizon Genel Energy plc is expected to generate 0.92 times more return on investment than Wex. However, Genel Energy plc is 1.09 times less risky than Wex. It trades about 0.06 of its potential returns per unit of risk. Wex Inc is currently generating about -0.18 per unit of risk. If you would invest  96.00  in Genel Energy plc on August 17, 2024 and sell it today you would earn a total of  3.00  from holding Genel Energy plc or generate 3.13% return on investment over 90 days.

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

Genel Energy plc  vs.  Wex Inc

Genel Energy plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genel Energy plc 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 December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Wex Inc

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Wex Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Wex is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Genel Energy and Wex

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

The idea behind Genel Energy plc and Wex Inc 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.