Correlation Between InPlay Oil and Cobalt Power
Can any of the company-specific risk be diversified away by investing in both InPlay Oil and Cobalt Power 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 Cobalt Power 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 Cobalt Power Group, you can compare the effects of market volatilities on InPlay Oil and Cobalt Power 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 Cobalt Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of InPlay Oil and Cobalt Power.
Diversification Opportunities for InPlay Oil and Cobalt Power
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between InPlay and Cobalt is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp and Cobalt Power Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cobalt Power Group 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 Cobalt Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cobalt Power Group has no effect on the direction of InPlay Oil i.e., InPlay Oil and Cobalt Power go up and down completely randomly.
Pair Corralation between InPlay Oil and Cobalt Power
Assuming the 90 days trading horizon InPlay Oil Corp is expected to generate 0.25 times more return on investment than Cobalt Power. However, InPlay Oil Corp is 4.02 times less risky than Cobalt Power. It trades about -0.11 of its potential returns per unit of risk. Cobalt Power Group is currently generating about -0.14 per unit of risk. If you would invest 190.00 in InPlay Oil Corp on September 3, 2024 and sell it today you would lose (10.00) from holding InPlay Oil Corp or give up 5.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
InPlay Oil Corp vs. Cobalt Power Group
Performance |
| Timeline |
| InPlay Oil Corp |
| Cobalt Power Group |
InPlay Oil and Cobalt Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InPlay Oil and Cobalt Power
The main advantage of trading using opposite InPlay Oil and Cobalt Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InPlay Oil position performs unexpectedly, Cobalt Power 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 Cobalt Power will offset losses from the drop in Cobalt Power's long position.| InPlay Oil vs. Gear Energy | InPlay Oil vs. Journey Energy | InPlay Oil vs. Yangarra Resources | InPlay Oil vs. Obsidian Energy |
| Cobalt Power vs. Tree Island Steel | Cobalt Power vs. Altair Resources | Cobalt Power vs. InPlay Oil Corp | Cobalt Power vs. Rogers Communications |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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