Correlation Between Falcon Oil and Inpex Corp
Can any of the company-specific risk be diversified away by investing in both Falcon Oil and Inpex Corp 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 Falcon Oil and Inpex Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Oil Gas and Inpex Corp ADR, you can compare the effects of market volatilities on Falcon Oil and Inpex Corp 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 Falcon Oil with a short position of Inpex Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Oil and Inpex Corp.
Diversification Opportunities for Falcon Oil and Inpex Corp
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Falcon and Inpex is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Oil Gas and Inpex Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inpex Corp ADR and Falcon 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 Falcon Oil Gas are associated (or correlated) with Inpex Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inpex Corp ADR has no effect on the direction of Falcon Oil i.e., Falcon Oil and Inpex Corp go up and down completely randomly.
Pair Corralation between Falcon Oil and Inpex Corp
Assuming the 90 days horizon Falcon Oil is expected to generate 1.65 times less return on investment than Inpex Corp. In addition to that, Falcon Oil is 6.62 times more volatile than Inpex Corp ADR. It trades about 0.04 of its total potential returns per unit of risk. Inpex Corp ADR is currently generating about 0.41 per unit of volatility. If you would invest 1,270 in Inpex Corp ADR on December 24, 2024 and sell it today you would earn a total of 137.00 from holding Inpex Corp ADR or generate 10.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Falcon Oil Gas vs. Inpex Corp ADR
Performance |
| Timeline |
| Falcon Oil Gas |
| Inpex Corp ADR |
Falcon Oil and Inpex Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Oil and Inpex Corp
The main advantage of trading using opposite Falcon Oil and Inpex Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Oil position performs unexpectedly, Inpex Corp 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 Inpex Corp will offset losses from the drop in Inpex Corp's long position.| Falcon Oil vs. Gulf Keystone Petroleum | Falcon Oil vs. Maverick Energy Group | Falcon Oil vs. North European Oil | Falcon Oil vs. SandRidge Energy |
| Inpex Corp vs. San Leon Energy | Inpex Corp vs. Enwell Energy plc | Inpex Corp vs. Dno ASA | Inpex Corp vs. Questerre 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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