Correlation Between InPlay Oil and Advantage Oil
Can any of the company-specific risk be diversified away by investing in both InPlay Oil and Advantage 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 InPlay Oil and Advantage Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InPlay Oil Corp and Advantage Oil Gas, you can compare the effects of market volatilities on InPlay Oil and Advantage 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 InPlay Oil with a short position of Advantage Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of InPlay Oil and Advantage Oil.
Diversification Opportunities for InPlay Oil and Advantage Oil
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between InPlay and Advantage is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp and Advantage Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantage Oil Gas and InPlay Oil 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 InPlay Oil Corp are associated (or correlated) with Advantage Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantage Oil Gas has no effect on the direction of InPlay Oil i.e., InPlay Oil and Advantage Oil go up and down completely randomly.
Pair Corralation between InPlay Oil and Advantage Oil
Assuming the 90 days trading horizon InPlay Oil Corp is expected to under-perform the Advantage Oil. But the stock apears to be less risky and, when comparing its historical volatility, InPlay Oil Corp is 1.18 times less risky than Advantage Oil. The stock trades about -0.11 of its potential returns per unit of risk. The Advantage Oil Gas is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 901.00 in Advantage Oil Gas on August 30, 2024 and sell it today you would lose (10.00) from holding Advantage Oil Gas or give up 1.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
InPlay Oil Corp vs. Advantage Oil Gas
Performance |
| Timeline |
| InPlay Oil Corp |
| Advantage Oil Gas |
InPlay Oil and Advantage Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InPlay Oil and Advantage Oil
The main advantage of trading using opposite InPlay Oil and Advantage Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InPlay Oil position performs unexpectedly, Advantage 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 Advantage Oil will offset losses from the drop in Advantage Oil's long position.| InPlay Oil vs. Gear Energy | InPlay Oil vs. Journey Energy | InPlay Oil vs. Yangarra Resources | InPlay Oil vs. Obsidian Energy |
| Advantage Oil vs. Birchcliff Energy | Advantage Oil vs. NuVista Energy | Advantage Oil vs. Kelt Exploration | Advantage Oil vs. Peyto ExplorationDevelopment 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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