Correlation Between Gear Energy and Kelt Exploration
Can any of the company-specific risk be diversified away by investing in both Gear Energy and Kelt Exploration 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 Gear Energy and Kelt Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gear Energy and Kelt Exploration, you can compare the effects of market volatilities on Gear Energy and Kelt Exploration 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 Gear Energy with a short position of Kelt Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gear Energy and Kelt Exploration.
Diversification Opportunities for Gear Energy and Kelt Exploration
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gear and Kelt is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Gear Energy and Kelt Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kelt Exploration and Gear Energy 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 Gear Energy are associated (or correlated) with Kelt Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kelt Exploration has no effect on the direction of Gear Energy i.e., Gear Energy and Kelt Exploration go up and down completely randomly.
Pair Corralation between Gear Energy and Kelt Exploration
Assuming the 90 days horizon Gear Energy is expected to under-perform the Kelt Exploration. In addition to that, Gear Energy is 1.08 times more volatile than Kelt Exploration. It trades about -0.02 of its total potential returns per unit of risk. Kelt Exploration is currently generating about 0.03 per unit of volatility. If you would invest 462.00 in Kelt Exploration on September 1, 2024 and sell it today you would earn a total of 38.00 from holding Kelt Exploration or generate 8.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gear Energy vs. Kelt Exploration
Performance |
| Timeline |
| Gear Energy |
| Kelt Exploration |
Gear Energy and Kelt Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gear Energy and Kelt Exploration
The main advantage of trading using opposite Gear Energy and Kelt Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gear Energy position performs unexpectedly, Kelt Exploration 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 Kelt Exploration will offset losses from the drop in Kelt Exploration's long position.| Gear Energy vs. Tamarack Valley Energy | Gear Energy vs. MEG Energy Corp | Gear Energy vs. Cardinal Energy | Gear Energy vs. Whitecap Resources |
| Kelt Exploration vs. ROK Resources | Kelt Exploration vs. PetroShale | Kelt Exploration vs. Pieridae Energy Limited | Kelt Exploration vs. Bengal 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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