Correlation Between InPlay Oil and Saga Metals
Can any of the company-specific risk be diversified away by investing in both InPlay Oil and Saga Metals 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 Saga Metals 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 Saga Metals Corp, you can compare the effects of market volatilities on InPlay Oil and Saga Metals 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 Saga Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of InPlay Oil and Saga Metals.
Diversification Opportunities for InPlay Oil and Saga Metals
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between InPlay and Saga is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp and Saga Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saga Metals 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 Saga Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saga Metals Corp has no effect on the direction of InPlay Oil i.e., InPlay Oil and Saga Metals go up and down completely randomly.
Pair Corralation between InPlay Oil and Saga Metals
Assuming the 90 days trading horizon InPlay Oil Corp is expected to generate 0.32 times more return on investment than Saga Metals. However, InPlay Oil Corp is 3.12 times less risky than Saga Metals. It trades about -0.03 of its potential returns per unit of risk. Saga Metals Corp is currently generating about -0.02 per unit of risk. If you would invest 236.00 in InPlay Oil Corp on December 11, 2024 and sell it today you would lose (81.00) from holding InPlay Oil Corp or give up 34.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 23.89% |
| Values | Daily Returns |
InPlay Oil Corp vs. Saga Metals Corp
Performance |
| Timeline |
| InPlay Oil Corp |
| Saga Metals Corp |
InPlay Oil and Saga Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InPlay Oil and Saga Metals
The main advantage of trading using opposite InPlay Oil and Saga Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InPlay Oil position performs unexpectedly, Saga Metals 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 Saga Metals will offset losses from the drop in Saga Metals' long position.| InPlay Oil vs. Journey 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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