Correlation Between Bip Investment and Stamper Oil
Can any of the company-specific risk be diversified away by investing in both Bip Investment and Stamper Oil 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 Bip Investment and Stamper Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bip Investment Corp and Stamper Oil Gas, you can compare the effects of market volatilities on Bip Investment and Stamper Oil 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 Bip Investment with a short position of Stamper Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bip Investment and Stamper Oil.
Diversification Opportunities for Bip Investment and Stamper Oil
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bip and Stamper is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Bip Investment Corp and Stamper Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stamper Oil Gas and Bip Investment 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 Bip Investment Corp are associated (or correlated) with Stamper Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stamper Oil Gas has no effect on the direction of Bip Investment i.e., Bip Investment and Stamper Oil go up and down completely randomly.
Pair Corralation between Bip Investment and Stamper Oil
Assuming the 90 days trading horizon Bip Investment is expected to generate 3.22 times less return on investment than Stamper Oil. But when comparing it to its historical volatility, Bip Investment Corp is 19.2 times less risky than Stamper Oil. It trades about 0.07 of its potential returns per unit of risk. Stamper Oil Gas is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 9.00 in Stamper Oil Gas on September 5, 2024 and sell it today you would lose (6.50) from holding Stamper Oil Gas or give up 72.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bip Investment Corp vs. Stamper Oil Gas
Performance |
| Timeline |
| Bip Investment Corp |
| Stamper Oil Gas |
Bip Investment and Stamper Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bip Investment and Stamper Oil
The main advantage of trading using opposite Bip Investment and Stamper Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bip Investment position performs unexpectedly, Stamper Oil 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 Stamper Oil will offset losses from the drop in Stamper Oil's long position.The idea behind Bip Investment Corp and Stamper Oil Gas 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.
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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