Correlation Between HP and Tourmaline Oil
Can any of the company-specific risk be diversified away by investing in both HP and Tourmaline 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 HP and Tourmaline Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and Tourmaline Oil Corp, you can compare the effects of market volatilities on HP and Tourmaline 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 HP with a short position of Tourmaline Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and Tourmaline Oil.
Diversification Opportunities for HP and Tourmaline Oil
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between HP and Tourmaline is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and Tourmaline Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tourmaline Oil Corp and HP 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 HP Inc are associated (or correlated) with Tourmaline Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tourmaline Oil Corp has no effect on the direction of HP i.e., HP and Tourmaline Oil go up and down completely randomly.
Pair Corralation between HP and Tourmaline Oil
Considering the 90-day investment horizon HP Inc is expected to generate 1.01 times more return on investment than Tourmaline Oil. However, HP is 1.01 times more volatile than Tourmaline Oil Corp. It trades about 0.01 of its potential returns per unit of risk. Tourmaline Oil Corp is currently generating about 0.01 per unit of risk. If you would invest 3,448 in HP Inc on November 28, 2024 and sell it today you would earn a total of 19.00 from holding HP Inc or generate 0.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HP Inc vs. Tourmaline Oil Corp
Performance |
| Timeline |
| HP Inc |
| Tourmaline Oil Corp |
HP and Tourmaline Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and Tourmaline Oil
The main advantage of trading using opposite HP and Tourmaline Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, Tourmaline 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 Tourmaline Oil will offset losses from the drop in Tourmaline Oil's long position.The idea behind HP Inc and Tourmaline Oil Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Tourmaline Oil vs. PrairieSky Royalty | Tourmaline Oil vs. Tamarack Valley Energy | Tourmaline Oil vs. MEG Energy Corp | Tourmaline Oil vs. Cardinal Energy |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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