Correlation Between InPlay Oil and Canacol Energy
Can any of the company-specific risk be diversified away by investing in both InPlay Oil and Canacol 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 InPlay Oil and Canacol Energy 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 Canacol Energy, you can compare the effects of market volatilities on InPlay Oil and Canacol 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 InPlay Oil with a short position of Canacol Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of InPlay Oil and Canacol Energy.
Diversification Opportunities for InPlay Oil and Canacol Energy
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between InPlay and Canacol is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp and Canacol Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canacol Energy 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 Canacol Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canacol Energy has no effect on the direction of InPlay Oil i.e., InPlay Oil and Canacol Energy go up and down completely randomly.
Pair Corralation between InPlay Oil and Canacol Energy
Assuming the 90 days trading horizon InPlay Oil Corp is expected to under-perform the Canacol Energy. But the stock apears to be less risky and, when comparing its historical volatility, InPlay Oil Corp is 2.36 times less risky than Canacol Energy. The stock trades about -0.11 of its potential returns per unit of risk. The Canacol Energy is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 279.00 in Canacol Energy on September 3, 2024 and sell it today you would earn a total of 107.00 from holding Canacol Energy or generate 38.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
InPlay Oil Corp vs. Canacol Energy
Performance |
| Timeline |
| InPlay Oil Corp |
| Canacol Energy |
InPlay Oil and Canacol Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InPlay Oil and Canacol Energy
The main advantage of trading using opposite InPlay Oil and Canacol Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InPlay Oil position performs unexpectedly, Canacol 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 Canacol Energy will offset losses from the drop in Canacol Energy's long position.| InPlay Oil vs. Gear Energy | InPlay Oil vs. Journey Energy | InPlay Oil vs. Yangarra Resources | InPlay Oil vs. Obsidian Energy |
| Canacol Energy vs. Parex Resources | Canacol Energy vs. Gran Tierra Energy | Canacol Energy vs. Kelt Exploration | Canacol Energy vs. Advantage Oil Gas |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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