Correlation Between CKX Lands and XXL Energy

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

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

Diversification Opportunities for CKX Lands and XXL Energy

-0.07

Correlation Coefficient

CKX Lands  XXL Energy

Good diversification

The 3 months correlation between CKX and XXL is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding CKX Lands and XXL Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XXL Energy Corp and CKX Lands 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 CKX Lands are associated (or correlated) with XXL Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XXL Energy Corp has no effect on the direction of CKX Lands i.e., CKX Lands and XXL Energy go up and down completely randomly.

Pair Corralation between CKX Lands and XXL Energy

Considering the 90-day investment horizon CKX Lands is expected to generate 0.16 times more return on investment than XXL Energy. However, CKX Lands is 6.3 times less risky than XXL Energy. It trades about -0.09 of its potential returns per unit of risk. XXL Energy Corp is currently generating about -0.13 per unit of risk. If you would invest  1,353  in CKX Lands on September 1, 2024 and sell it today you would lose (133.00) from holding CKX Lands or give up 9.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	82.81%
Values	Daily Returns

CKX Lands  vs.  XXL Energy Corp

CKX Lands

Risk-Adjusted Performance

0 of 100

Very Weak

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

XXL Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XXL Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental 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.

Pair Trading with CKX Lands and XXL Energy

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

The idea behind CKX Lands and XXL Energy Corp 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.