Correlation Between Gear Energy and InPlay Oil
Can any of the company-specific risk be diversified away by investing in both Gear Energy and InPlay 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 Gear Energy and InPlay Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gear Energy and InPlay Oil Corp, you can compare the effects of market volatilities on Gear Energy and InPlay 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 Gear Energy with a short position of InPlay Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gear Energy and InPlay Oil.
Diversification Opportunities for Gear Energy and InPlay Oil
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Gear and InPlay is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Gear Energy and InPlay Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InPlay Oil 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 InPlay Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InPlay Oil Corp has no effect on the direction of Gear Energy i.e., Gear Energy and InPlay Oil go up and down completely randomly.
Pair Corralation between Gear Energy and InPlay Oil
Assuming the 90 days trading horizon Gear Energy is expected to generate 1.14 times more return on investment than InPlay Oil. However, Gear Energy is 1.14 times more volatile than InPlay Oil Corp. It trades about 0.01 of its potential returns per unit of risk. InPlay Oil Corp is currently generating about -0.14 per unit of risk. If you would invest 53.00 in Gear Energy on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Gear Energy or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gear Energy vs. InPlay Oil Corp
Performance |
| Timeline |
| Gear Energy |
| InPlay Oil Corp |
Gear Energy and InPlay Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gear Energy and InPlay Oil
The main advantage of trading using opposite Gear Energy and InPlay Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gear Energy position performs unexpectedly, InPlay 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 InPlay Oil will offset losses from the drop in InPlay Oil's long position.| Gear Energy vs. Cardinal Energy | Gear Energy vs. Tamarack Valley Energy | Gear Energy vs. Athabasca Oil Corp | Gear Energy vs. Headwater Exploration |
| InPlay Oil vs. Canadian Natural Resources | InPlay Oil vs. Suncor Energy | InPlay Oil vs. iShares Canadian HYBrid | InPlay Oil vs. Altagas Cum Red |
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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