Correlation Between Freehold Royalties and Saturn Oil
Can any of the company-specific risk be diversified away by investing in both Freehold Royalties and Saturn 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 Freehold Royalties and Saturn Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freehold Royalties and Saturn Oil Gas, you can compare the effects of market volatilities on Freehold Royalties and Saturn 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 Freehold Royalties with a short position of Saturn Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freehold Royalties and Saturn Oil.
Diversification Opportunities for Freehold Royalties and Saturn Oil
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Freehold and Saturn is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Freehold Royalties and Saturn Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saturn Oil Gas and Freehold Royalties 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 Freehold Royalties are associated (or correlated) with Saturn Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saturn Oil Gas has no effect on the direction of Freehold Royalties i.e., Freehold Royalties and Saturn Oil go up and down completely randomly.
Pair Corralation between Freehold Royalties and Saturn Oil
Assuming the 90 days horizon Freehold Royalties is expected to generate 0.48 times more return on investment than Saturn Oil. However, Freehold Royalties is 2.07 times less risky than Saturn Oil. It trades about 0.02 of its potential returns per unit of risk. Saturn Oil Gas is currently generating about -0.01 per unit of risk. If you would invest 954.00 in Freehold Royalties on September 1, 2024 and sell it today you would earn a total of 41.00 from holding Freehold Royalties or generate 4.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Freehold Royalties vs. Saturn Oil Gas
Performance |
| Timeline |
| Freehold Royalties |
| Saturn Oil Gas |
Freehold Royalties and Saturn Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freehold Royalties and Saturn Oil
The main advantage of trading using opposite Freehold Royalties and Saturn Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freehold Royalties position performs unexpectedly, Saturn 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 Saturn Oil will offset losses from the drop in Saturn Oil's long position.| Freehold Royalties vs. PrairieSky Royalty | Freehold Royalties vs. Tamarack Valley Energy | Freehold Royalties vs. MEG Energy Corp | Freehold Royalties vs. Tourmaline Oil Corp |
| Saturn Oil vs. San Leon Energy | Saturn Oil vs. Enwell Energy plc | Saturn Oil vs. Dno ASA | Saturn Oil 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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