Correlation Between InPlay Oil and Sabio Holdings
Can any of the company-specific risk be diversified away by investing in both InPlay Oil and Sabio Holdings 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 Sabio Holdings 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 Sabio Holdings, you can compare the effects of market volatilities on InPlay Oil and Sabio Holdings 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 Sabio Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of InPlay Oil and Sabio Holdings.
Diversification Opportunities for InPlay Oil and Sabio Holdings
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between InPlay and Sabio is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp and Sabio Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabio Holdings 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 Sabio Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabio Holdings has no effect on the direction of InPlay Oil i.e., InPlay Oil and Sabio Holdings go up and down completely randomly.
Pair Corralation between InPlay Oil and Sabio Holdings
Assuming the 90 days trading horizon InPlay Oil Corp is expected to under-perform the Sabio Holdings. But the stock apears to be less risky and, when comparing its historical volatility, InPlay Oil Corp is 1.61 times less risky than Sabio Holdings. The stock trades about -0.21 of its potential returns per unit of risk. The Sabio Holdings is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 53.00 in Sabio Holdings on November 3, 2024 and sell it today you would lose (3.00) from holding Sabio Holdings or give up 5.66% 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. Sabio Holdings
Performance |
| Timeline |
| InPlay Oil Corp |
| Sabio Holdings |
InPlay Oil and Sabio Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InPlay Oil and Sabio Holdings
The main advantage of trading using opposite InPlay Oil and Sabio Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InPlay Oil position performs unexpectedly, Sabio Holdings 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 Sabio Holdings will offset losses from the drop in Sabio Holdings' 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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