Correlation Between InPlay Oil and Information Services
Can any of the company-specific risk be diversified away by investing in both InPlay Oil and Information Services 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 Information Services 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 Information Services International Dentsu, you can compare the effects of market volatilities on InPlay Oil and Information Services 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 Information Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of InPlay Oil and Information Services.
Diversification Opportunities for InPlay Oil and Information Services
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between InPlay and Information is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp and Information Services Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information Services 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 Information Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Information Services has no effect on the direction of InPlay Oil i.e., InPlay Oil and Information Services go up and down completely randomly.
Pair Corralation between InPlay Oil and Information Services
Assuming the 90 days trading horizon InPlay Oil Corp is expected to under-perform the Information Services. In addition to that, InPlay Oil is 1.0 times more volatile than Information Services International Dentsu. It trades about -0.02 of its total potential returns per unit of risk. Information Services International Dentsu is currently generating about 0.03 per unit of volatility. If you would invest 2,820 in Information Services International Dentsu on September 3, 2024 and sell it today you would earn a total of 580.00 from holding Information Services International Dentsu or generate 20.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
InPlay Oil Corp vs. Information Services Internati
Performance |
| Timeline |
| InPlay Oil Corp |
| Information Services |
InPlay Oil and Information Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InPlay Oil and Information Services
The main advantage of trading using opposite InPlay Oil and Information Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InPlay Oil position performs unexpectedly, Information Services 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 Information Services will offset losses from the drop in Information Services' long position.The idea behind InPlay Oil Corp and Information Services International Dentsu 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.| Information Services vs. Mitsubishi Gas Chemical | Information Services vs. Tencent Music Entertainment | Information Services vs. EIDESVIK OFFSHORE NK | Information Services vs. BW OFFSHORE LTD |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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