Correlation Between InPlay Oil and PLAYMATES TOYS
Can any of the company-specific risk be diversified away by investing in both InPlay Oil and PLAYMATES TOYS 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 InPlay Oil and PLAYMATES TOYS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InPlay Oil Corp and PLAYMATES TOYS, you can compare the effects of market volatilities on InPlay Oil and PLAYMATES TOYS 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 InPlay Oil with a short position of PLAYMATES TOYS. Check out your portfolio center. Please also check ongoing floating volatility patterns of InPlay Oil and PLAYMATES TOYS.
Diversification Opportunities for InPlay Oil and PLAYMATES TOYS
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between InPlay and PLAYMATES is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp and PLAYMATES TOYS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYMATES TOYS and InPlay Oil 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 InPlay Oil Corp are associated (or correlated) with PLAYMATES TOYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYMATES TOYS has no effect on the direction of InPlay Oil i.e., InPlay Oil and PLAYMATES TOYS go up and down completely randomly.
Pair Corralation between InPlay Oil and PLAYMATES TOYS
Assuming the 90 days trading horizon InPlay Oil Corp is expected to generate 0.93 times more return on investment than PLAYMATES TOYS. However, InPlay Oil Corp is 1.08 times less risky than PLAYMATES TOYS. It trades about -0.04 of its potential returns per unit of risk. PLAYMATES TOYS is currently generating about -0.21 per unit of risk. If you would invest 122.00 in InPlay Oil Corp on September 5, 2024 and sell it today you would lose (3.00) from holding InPlay Oil Corp or give up 2.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
InPlay Oil Corp vs. PLAYMATES TOYS
Performance |
| Timeline |
| InPlay Oil Corp |
| PLAYMATES TOYS |
InPlay Oil and PLAYMATES TOYS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InPlay Oil and PLAYMATES TOYS
The main advantage of trading using opposite InPlay Oil and PLAYMATES TOYS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InPlay Oil position performs unexpectedly, PLAYMATES TOYS 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 PLAYMATES TOYS will offset losses from the drop in PLAYMATES TOYS's long position.The idea behind InPlay Oil Corp and PLAYMATES TOYS 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.| PLAYMATES TOYS vs. TOTAL GABON | PLAYMATES TOYS vs. Walgreens Boots Alliance | PLAYMATES TOYS vs. Peak Resources Limited |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |