Correlation Between Arrow Exploration and Falcon Oil
Can any of the company-specific risk be diversified away by investing in both Arrow Exploration and Falcon 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 Arrow Exploration and Falcon Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow Exploration Corp and Falcon Oil Gas, you can compare the effects of market volatilities on Arrow Exploration and Falcon 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 Arrow Exploration with a short position of Falcon Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Exploration and Falcon Oil.
Diversification Opportunities for Arrow Exploration and Falcon Oil
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Arrow and Falcon is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Exploration Corp and Falcon Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Oil Gas and Arrow Exploration 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 Arrow Exploration Corp are associated (or correlated) with Falcon Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Oil Gas has no effect on the direction of Arrow Exploration i.e., Arrow Exploration and Falcon Oil go up and down completely randomly.
Pair Corralation between Arrow Exploration and Falcon Oil
Assuming the 90 days horizon Arrow Exploration Corp is expected to under-perform the Falcon Oil. But the pink sheet apears to be less risky and, when comparing its historical volatility, Arrow Exploration Corp is 2.31 times less risky than Falcon Oil. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Falcon Oil Gas is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 6.00 in Falcon Oil Gas on November 3, 2024 and sell it today you would earn a total of 3.00 from holding Falcon Oil Gas or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arrow Exploration Corp vs. Falcon Oil Gas
Performance |
| Timeline |
| Arrow Exploration Corp |
| Falcon Oil Gas |
Arrow Exploration and Falcon Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Exploration and Falcon Oil
The main advantage of trading using opposite Arrow Exploration and Falcon Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Exploration position performs unexpectedly, Falcon 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 Falcon Oil will offset losses from the drop in Falcon Oil's long position.| Arrow Exploration vs. Barrister Energy LLC | Arrow Exploration vs. Buru Energy Limited | Arrow Exploration vs. Altura Energy | Arrow Exploration vs. Daybreak Oil and |
| Falcon Oil vs. Gulf Keystone Petroleum | Falcon Oil vs. Maverick Energy Group | Falcon Oil vs. North European Oil | Falcon Oil vs. SandRidge 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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