Correlation Between Gear Energy and PetroTal Corp
Can any of the company-specific risk be diversified away by investing in both Gear Energy and PetroTal 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 Gear Energy and PetroTal Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gear Energy and PetroTal Corp, you can compare the effects of market volatilities on Gear Energy and PetroTal 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 Gear Energy with a short position of PetroTal Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gear Energy and PetroTal Corp.
Diversification Opportunities for Gear Energy and PetroTal Corp
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Gear and PetroTal is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Gear Energy and PetroTal Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroTal Corp 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 PetroTal Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetroTal Corp has no effect on the direction of Gear Energy i.e., Gear Energy and PetroTal Corp go up and down completely randomly.
Pair Corralation between Gear Energy and PetroTal Corp
Assuming the 90 days horizon Gear Energy is expected to under-perform the PetroTal Corp. But the pink sheet apears to be less risky and, when comparing its historical volatility, Gear Energy is 1.18 times less risky than PetroTal Corp. The pink sheet trades about -0.08 of its potential returns per unit of risk. The PetroTal Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 46.00 in PetroTal Corp on January 14, 2025 and sell it today you would lose (3.00) from holding PetroTal Corp or give up 6.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 55.88% |
| Values | Daily Returns |
Gear Energy vs. PetroTal Corp
Performance |
| Timeline |
| Gear Energy |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| PetroTal Corp |
Gear Energy and PetroTal Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gear Energy and PetroTal Corp
The main advantage of trading using opposite Gear Energy and PetroTal Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gear Energy position performs unexpectedly, PetroTal 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 PetroTal Corp will offset losses from the drop in PetroTal Corp'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 |
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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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