Correlation Between Daybreak Oil and AER Energy
Can any of the company-specific risk be diversified away by investing in both Daybreak Oil and AER Energy 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 Daybreak Oil and AER Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daybreak Oil and and AER Energy Resources, you can compare the effects of market volatilities on Daybreak Oil and AER Energy 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 Daybreak Oil with a short position of AER Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daybreak Oil and AER Energy.
Diversification Opportunities for Daybreak Oil and AER Energy
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Daybreak and AER is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Daybreak Oil and and AER Energy Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AER Energy Resources and Daybreak 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 Daybreak Oil and are associated (or correlated) with AER Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AER Energy Resources has no effect on the direction of Daybreak Oil i.e., Daybreak Oil and AER Energy go up and down completely randomly.
Pair Corralation between Daybreak Oil and AER Energy
Given the investment horizon of 90 days Daybreak Oil is expected to generate 1.91 times less return on investment than AER Energy. But when comparing it to its historical volatility, Daybreak Oil and is 1.36 times less risky than AER Energy. It trades about 0.04 of its potential returns per unit of risk. AER Energy Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 0.00 in AER Energy Resources on August 28, 2024 and sell it today you would earn a total of 0.01 from holding AER Energy Resources or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daybreak Oil and vs. AER Energy Resources
Performance |
| Timeline |
| Daybreak Oil |
| AER Energy Resources |
Daybreak Oil and AER Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daybreak Oil and AER Energy
The main advantage of trading using opposite Daybreak Oil and AER Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daybreak Oil position performs unexpectedly, AER Energy 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 AER Energy will offset losses from the drop in AER Energy's long position.| Daybreak Oil vs. Barrister Energy LLC | Daybreak Oil vs. Buru Energy Limited | Daybreak Oil vs. Altura Energy | Daybreak Oil vs. Arrow Exploration Corp |
| AER Energy vs. Caduceus Software Systems | AER Energy vs. North Springs Resources | AER Energy vs. Nyxio Tech Corp | AER Energy vs. Access Power Co |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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