Correlation Between Gear Energy and Vermilion Energy
Can any of the company-specific risk be diversified away by investing in both Gear Energy and Vermilion Energy 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 Vermilion Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gear Energy and Vermilion Energy, you can compare the effects of market volatilities on Gear Energy and Vermilion Energy 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 Vermilion Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gear Energy and Vermilion Energy.
Diversification Opportunities for Gear Energy and Vermilion Energy
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gear and Vermilion is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Gear Energy and Vermilion Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vermilion Energy 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 Vermilion Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vermilion Energy has no effect on the direction of Gear Energy i.e., Gear Energy and Vermilion Energy go up and down completely randomly.
Pair Corralation between Gear Energy and Vermilion Energy
Assuming the 90 days trading horizon Gear Energy is expected to generate 1.12 times more return on investment than Vermilion Energy. However, Gear Energy is 1.12 times more volatile than Vermilion Energy. It trades about -0.02 of its potential returns per unit of risk. Vermilion Energy is currently generating about -0.03 per unit of risk. If you would invest 77.00 in Gear Energy on September 12, 2024 and sell it today you would lose (27.00) from holding Gear Energy or give up 35.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gear Energy vs. Vermilion Energy
Performance |
| Timeline |
| Gear Energy |
| Vermilion Energy |
Gear Energy and Vermilion Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gear Energy and Vermilion Energy
The main advantage of trading using opposite Gear Energy and Vermilion Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gear Energy position performs unexpectedly, Vermilion Energy 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 Vermilion Energy will offset losses from the drop in Vermilion Energy'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 |
| Vermilion Energy vs. Whitecap Resources | Vermilion Energy vs. ARC Resources | Vermilion Energy vs. Tourmaline Oil Corp | Vermilion Energy vs. MEG Energy Corp |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |