Correlation Between InPlay Oil and INPOST SA
Can any of the company-specific risk be diversified away by investing in both InPlay Oil and INPOST SA 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 INPOST SA 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 INPOST SA EO, you can compare the effects of market volatilities on InPlay Oil and INPOST SA 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 INPOST SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of InPlay Oil and INPOST SA.
Diversification Opportunities for InPlay Oil and INPOST SA
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between InPlay and INPOST is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp and INPOST SA EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INPOST SA EO 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 INPOST SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INPOST SA EO has no effect on the direction of InPlay Oil i.e., InPlay Oil and INPOST SA go up and down completely randomly.
Pair Corralation between InPlay Oil and INPOST SA
Assuming the 90 days trading horizon InPlay Oil Corp is expected to under-perform the INPOST SA. In addition to that, InPlay Oil is 1.07 times more volatile than INPOST SA EO. It trades about -0.06 of its total potential returns per unit of risk. INPOST SA EO is currently generating about 0.01 per unit of volatility. If you would invest 1,546 in INPOST SA EO on October 26, 2024 and sell it today you would earn a total of 15.00 from holding INPOST SA EO or generate 0.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.2% |
| Values | Daily Returns |
InPlay Oil Corp vs. INPOST SA EO
Performance |
| Timeline |
| InPlay Oil Corp |
| INPOST SA EO |
InPlay Oil and INPOST SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InPlay Oil and INPOST SA
The main advantage of trading using opposite InPlay Oil and INPOST SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InPlay Oil position performs unexpectedly, INPOST SA 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 INPOST SA will offset losses from the drop in INPOST SA's long position.The idea behind InPlay Oil Corp and INPOST SA EO 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.| INPOST SA vs. AUST AGRICULTURAL | INPOST SA vs. InPlay Oil Corp | INPOST SA vs. Clean Energy Fuels | INPOST SA vs. AGRICULTBK HADR25 YC |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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