Correlation Between InPlay Oil and FG Acquisition
Can any of the company-specific risk be diversified away by investing in both InPlay Oil and FG Acquisition 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 FG Acquisition 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 FG Acquisition Corp, you can compare the effects of market volatilities on InPlay Oil and FG Acquisition 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 FG Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of InPlay Oil and FG Acquisition.
Diversification Opportunities for InPlay Oil and FG Acquisition
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between InPlay and FGAA-U is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp and FG Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FG Acquisition Corp 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 FG Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FG Acquisition Corp has no effect on the direction of InPlay Oil i.e., InPlay Oil and FG Acquisition go up and down completely randomly.
Pair Corralation between InPlay Oil and FG Acquisition
Assuming the 90 days trading horizon InPlay Oil Corp is expected to under-perform the FG Acquisition. In addition to that, InPlay Oil is 3.52 times more volatile than FG Acquisition Corp. It trades about -0.03 of its total potential returns per unit of risk. FG Acquisition Corp is currently generating about 0.07 per unit of volatility. If you would invest 991.00 in FG Acquisition Corp on September 3, 2024 and sell it today you would earn a total of 187.00 from holding FG Acquisition Corp or generate 18.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.58% |
| Values | Daily Returns |
InPlay Oil Corp vs. FG Acquisition Corp
Performance |
| Timeline |
| InPlay Oil Corp |
| FG Acquisition Corp |
InPlay Oil and FG Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InPlay Oil and FG Acquisition
The main advantage of trading using opposite InPlay Oil and FG Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InPlay Oil position performs unexpectedly, FG Acquisition 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 FG Acquisition will offset losses from the drop in FG Acquisition's long position.| InPlay Oil vs. Gear Energy | InPlay Oil vs. Journey Energy | InPlay Oil vs. Yangarra Resources | InPlay Oil vs. Obsidian Energy |
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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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