Correlation Between Advantage Oil and Parex Resources
Can any of the company-specific risk be diversified away by investing in both Advantage Oil and Parex Resources 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 Advantage Oil and Parex Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advantage Oil Gas and Parex Resources, you can compare the effects of market volatilities on Advantage Oil and Parex Resources 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 Advantage Oil with a short position of Parex Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advantage Oil and Parex Resources.
Diversification Opportunities for Advantage Oil and Parex Resources
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Advantage and Parex is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Advantage Oil Gas and Parex Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parex Resources and Advantage 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 Advantage Oil Gas are associated (or correlated) with Parex Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parex Resources has no effect on the direction of Advantage Oil i.e., Advantage Oil and Parex Resources go up and down completely randomly.
Pair Corralation between Advantage Oil and Parex Resources
Assuming the 90 days trading horizon Advantage Oil Gas is expected to under-perform the Parex Resources. In addition to that, Advantage Oil is 1.32 times more volatile than Parex Resources. It trades about -0.01 of its total potential returns per unit of risk. Parex Resources is currently generating about 0.42 per unit of volatility. If you would invest 1,246 in Parex Resources on August 30, 2024 and sell it today you would earn a total of 245.00 from holding Parex Resources or generate 19.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advantage Oil Gas vs. Parex Resources
Performance |
| Timeline |
| Advantage Oil Gas |
| Parex Resources |
Advantage Oil and Parex Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advantage Oil and Parex Resources
The main advantage of trading using opposite Advantage Oil and Parex Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advantage Oil position performs unexpectedly, Parex Resources 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 Parex Resources will offset losses from the drop in Parex Resources' long position.| Advantage Oil vs. Birchcliff Energy | Advantage Oil vs. NuVista Energy | Advantage Oil vs. Kelt Exploration | Advantage Oil vs. Peyto ExplorationDevelopment Corp |
| Parex Resources vs. Tourmaline Oil Corp | Parex Resources vs. PrairieSky Royalty | Parex Resources vs. ARC Resources | Parex Resources vs. MEG Energy Corp |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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