Correlation Between High Liner and Stampede Drilling
Can any of the company-specific risk be diversified away by investing in both High Liner and Stampede Drilling 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 High Liner and Stampede Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Liner Foods and Stampede Drilling, you can compare the effects of market volatilities on High Liner and Stampede Drilling 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 High Liner with a short position of Stampede Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Liner and Stampede Drilling.
Diversification Opportunities for High Liner and Stampede Drilling
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between High and Stampede is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding High Liner Foods and Stampede Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stampede Drilling and High Liner 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 High Liner Foods are associated (or correlated) with Stampede Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stampede Drilling has no effect on the direction of High Liner i.e., High Liner and Stampede Drilling go up and down completely randomly.
Pair Corralation between High Liner and Stampede Drilling
Assuming the 90 days trading horizon High Liner Foods is expected to under-perform the Stampede Drilling. But the stock apears to be less risky and, when comparing its historical volatility, High Liner Foods is 2.32 times less risky than Stampede Drilling. The stock trades about -0.11 of its potential returns per unit of risk. The Stampede Drilling is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 18.00 in Stampede Drilling on October 20, 2024 and sell it today you would earn a total of 1.00 from holding Stampede Drilling or generate 5.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
High Liner Foods vs. Stampede Drilling
Performance |
| Timeline |
| High Liner Foods |
| Stampede Drilling |
High Liner and Stampede Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Liner and Stampede Drilling
The main advantage of trading using opposite High Liner and Stampede Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Liner position performs unexpectedly, Stampede Drilling 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 Stampede Drilling will offset losses from the drop in Stampede Drilling's long position.| High Liner vs. Leons Furniture Limited | High Liner vs. Autocanada | High Liner vs. Maple Leaf Foods | High Liner vs. Premium Brands Holdings |
| Stampede Drilling vs. STEP Energy Services | Stampede Drilling vs. Southern Energy Corp | Stampede Drilling vs. PHX Energy Services |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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