Correlation Between Gear Energy and Valeura Energy
Can any of the company-specific risk be diversified away by investing in both Gear Energy and Valeura 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 Valeura 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 Valeura Energy, you can compare the effects of market volatilities on Gear Energy and Valeura 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 Valeura Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gear Energy and Valeura Energy.
Diversification Opportunities for Gear Energy and Valeura Energy
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gear and Valeura is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Gear Energy and Valeura Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valeura 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 Valeura Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valeura Energy has no effect on the direction of Gear Energy i.e., Gear Energy and Valeura Energy go up and down completely randomly.
Pair Corralation between Gear Energy and Valeura Energy
Assuming the 90 days trading horizon Gear Energy is expected to under-perform the Valeura Energy. But the stock apears to be less risky and, when comparing its historical volatility, Gear Energy is 1.12 times less risky than Valeura Energy. The stock trades about -0.02 of its potential returns per unit of risk. The Valeura Energy is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 518.00 in Valeura Energy on September 12, 2024 and sell it today you would earn a total of 143.00 from holding Valeura Energy or generate 27.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gear Energy vs. Valeura Energy
Performance |
| Timeline |
| Gear Energy |
| Valeura Energy |
Gear Energy and Valeura Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gear Energy and Valeura Energy
The main advantage of trading using opposite Gear Energy and Valeura Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gear Energy position performs unexpectedly, Valeura 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 Valeura Energy will offset losses from the drop in Valeura 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 |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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