Correlation Between Pioneer Natural and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both Pioneer Natural and Alibaba Group 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 Pioneer Natural and Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pioneer Natural Resources and Alibaba Group Holding, you can compare the effects of market volatilities on Pioneer Natural and Alibaba Group 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 Pioneer Natural with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pioneer Natural and Alibaba Group.
Diversification Opportunities for Pioneer Natural and Alibaba Group
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pioneer and Alibaba is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Pioneer Natural Resources and Alibaba Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alibaba Group Holding and Pioneer Natural 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 Pioneer Natural Resources are associated (or correlated) with Alibaba Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alibaba Group Holding has no effect on the direction of Pioneer Natural i.e., Pioneer Natural and Alibaba Group go up and down completely randomly.
Pair Corralation between Pioneer Natural and Alibaba Group
Assuming the 90 days horizon Pioneer Natural Resources is expected to generate 5.95 times more return on investment than Alibaba Group. However, Pioneer Natural is 5.95 times more volatile than Alibaba Group Holding. It trades about 0.07 of its potential returns per unit of risk. Alibaba Group Holding is currently generating about -0.07 per unit of risk. If you would invest 40.00 in Pioneer Natural Resources on September 26, 2024 and sell it today you would earn a total of 0.00 from holding Pioneer Natural Resources or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 84.38% |
Values | Daily Returns |
Pioneer Natural Resources vs. Alibaba Group Holding
Performance |
Timeline |
Pioneer Natural Resources |
Alibaba Group Holding |
Pioneer Natural and Alibaba Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pioneer Natural and Alibaba Group
The main advantage of trading using opposite Pioneer Natural and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pioneer Natural position performs unexpectedly, Alibaba Group 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 Alibaba Group will offset losses from the drop in Alibaba Group's long position.Pioneer Natural vs. Alibaba Group Holding | Pioneer Natural vs. ConocoPhillips | Pioneer Natural vs. CNOOC | Pioneer Natural vs. Canadian Natural Resources |
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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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