Correlation Between InPlay Oil and News
Can any of the company-specific risk be diversified away by investing in both InPlay Oil and News 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 News 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 News Corporation, you can compare the effects of market volatilities on InPlay Oil and News 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 News. Check out your portfolio center. Please also check ongoing floating volatility patterns of InPlay Oil and News.
Diversification Opportunities for InPlay Oil and News
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between InPlay and News is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp and News Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on News 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 News. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of News has no effect on the direction of InPlay Oil i.e., InPlay Oil and News go up and down completely randomly.
Pair Corralation between InPlay Oil and News
Assuming the 90 days trading horizon InPlay Oil Corp is expected to under-perform the News. In addition to that, InPlay Oil is 1.31 times more volatile than News Corporation. It trades about -0.03 of its total potential returns per unit of risk. News Corporation is currently generating about 0.08 per unit of volatility. If you would invest 1,579 in News Corporation on November 27, 2024 and sell it today you would earn a total of 1,141 from holding News Corporation or generate 72.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
InPlay Oil Corp vs. News Corp.
Performance |
| Timeline |
| InPlay Oil Corp |
| News |
InPlay Oil and News Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InPlay Oil and News
The main advantage of trading using opposite InPlay Oil and News positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InPlay Oil position performs unexpectedly, News 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 News will offset losses from the drop in News' long position.| InPlay Oil vs. USU Software AG | InPlay Oil vs. AXWAY SOFTWARE EO | InPlay Oil vs. CORNISH METALS INC | InPlay Oil vs. GBS Software AG |
| News vs. REVO INSURANCE SPA | News vs. Suntory Beverage Food | News vs. Thai Beverage Public | News vs. Zurich Insurance Group |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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