Correlation Between Source Energy and ACT Energy
Can any of the company-specific risk be diversified away by investing in both Source Energy and ACT 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 Source Energy and ACT Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Source Energy Services and ACT Energy Technologies, you can compare the effects of market volatilities on Source Energy and ACT 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 Source Energy with a short position of ACT Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Source Energy and ACT Energy.
Diversification Opportunities for Source Energy and ACT Energy
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Source and ACT is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Source Energy Services and ACT Energy Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACT Energy Technologies and Source 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 Source Energy Services are associated (or correlated) with ACT Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACT Energy Technologies has no effect on the direction of Source Energy i.e., Source Energy and ACT Energy go up and down completely randomly.
Pair Corralation between Source Energy and ACT Energy
Assuming the 90 days trading horizon Source Energy Services is expected to generate 1.82 times more return on investment than ACT Energy. However, Source Energy is 1.82 times more volatile than ACT Energy Technologies. It trades about 0.05 of its potential returns per unit of risk. ACT Energy Technologies is currently generating about -0.07 per unit of risk. If you would invest 1,198 in Source Energy Services on May 14, 2025 and sell it today you would earn a total of 74.00 from holding Source Energy Services or generate 6.18% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Source Energy Services vs. ACT Energy Technologies
Performance |
Timeline |
Source Energy Services |
ACT Energy Technologies |
Source Energy and ACT Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Source Energy and ACT Energy
The main advantage of trading using opposite Source Energy and ACT Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Source Energy position performs unexpectedly, ACT 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 ACT Energy will offset losses from the drop in ACT Energy's long position.Source Energy vs. STEP Energy Services | Source Energy vs. Calfrac Well Services | Source Energy vs. Total Energy Services | Source Energy vs. Mattr Corp |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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