Correlation Between Advantage Oil and Trican Well
Can any of the company-specific risk be diversified away by investing in both Advantage Oil and Trican Well 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 Trican Well 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 Trican Well Service, you can compare the effects of market volatilities on Advantage Oil and Trican Well 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 Trican Well. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advantage Oil and Trican Well.
Diversification Opportunities for Advantage Oil and Trican Well
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Advantage and Trican is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Advantage Oil Gas and Trican Well Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trican Well Service 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 Trican Well. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trican Well Service has no effect on the direction of Advantage Oil i.e., Advantage Oil and Trican Well go up and down completely randomly.
Pair Corralation between Advantage Oil and Trican Well
Assuming the 90 days trading horizon Advantage Oil is expected to generate 15.61 times less return on investment than Trican Well. In addition to that, Advantage Oil is 1.2 times more volatile than Trican Well Service. It trades about 0.01 of its total potential returns per unit of risk. Trican Well Service is currently generating about 0.23 per unit of volatility. If you would invest 433.00 in Trican Well Service on August 28, 2024 and sell it today you would earn a total of 48.00 from holding Trican Well Service or generate 11.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advantage Oil Gas vs. Trican Well Service
Performance |
| Timeline |
| Advantage Oil Gas |
| Trican Well Service |
Advantage Oil and Trican Well Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advantage Oil and Trican Well
The main advantage of trading using opposite Advantage Oil and Trican Well positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advantage Oil position performs unexpectedly, Trican Well 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 Trican Well will offset losses from the drop in Trican Well's long position.| Advantage Oil vs. Birchcliff Energy | Advantage Oil vs. NuVista Energy | Advantage Oil vs. Kelt Exploration | Advantage Oil vs. Peyto ExplorationDevelopment Corp |
| Trican Well vs. Calfrac Well Services | Trican Well vs. Precision Drilling | Trican Well vs. Ensign Energy Services | Trican Well vs. Birchcliff Energy |
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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