Correlation Between InPlay Oil and Gunpoint Exploration
Can any of the company-specific risk be diversified away by investing in both InPlay Oil and Gunpoint Exploration 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 Gunpoint Exploration 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 Gunpoint Exploration, you can compare the effects of market volatilities on InPlay Oil and Gunpoint Exploration 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 Gunpoint Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of InPlay Oil and Gunpoint Exploration.
Diversification Opportunities for InPlay Oil and Gunpoint Exploration
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between InPlay and Gunpoint is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp and Gunpoint Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gunpoint Exploration 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 Gunpoint Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gunpoint Exploration has no effect on the direction of InPlay Oil i.e., InPlay Oil and Gunpoint Exploration go up and down completely randomly.
Pair Corralation between InPlay Oil and Gunpoint Exploration
Assuming the 90 days trading horizon InPlay Oil Corp is expected to generate 0.96 times more return on investment than Gunpoint Exploration. However, InPlay Oil Corp is 1.04 times less risky than Gunpoint Exploration. It trades about -0.1 of its potential returns per unit of risk. Gunpoint Exploration is currently generating about -0.31 per unit of risk. If you would invest 189.00 in InPlay Oil Corp on September 1, 2024 and sell it today you would lose (9.00) from holding InPlay Oil Corp or give up 4.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
InPlay Oil Corp vs. Gunpoint Exploration
Performance |
| Timeline |
| InPlay Oil Corp |
| Gunpoint Exploration |
InPlay Oil and Gunpoint Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InPlay Oil and Gunpoint Exploration
The main advantage of trading using opposite InPlay Oil and Gunpoint Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InPlay Oil position performs unexpectedly, Gunpoint Exploration 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 Gunpoint Exploration will offset losses from the drop in Gunpoint Exploration's long position.The idea behind InPlay Oil Corp and Gunpoint Exploration 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.| Gunpoint Exploration vs. 2028 Investment Grade | Gunpoint Exploration vs. InPlay Oil Corp | Gunpoint Exploration vs. Verizon Communications CDR | Gunpoint Exploration vs. Canlan Ice Sports |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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