Correlation Between InPlay Oil and Touchstone Exploration
Can any of the company-specific risk be diversified away by investing in both InPlay Oil and Touchstone 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 Touchstone 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 Touchstone Exploration, you can compare the effects of market volatilities on InPlay Oil and Touchstone 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 Touchstone Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of InPlay Oil and Touchstone Exploration.
Diversification Opportunities for InPlay Oil and Touchstone Exploration
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between InPlay and Touchstone is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp and Touchstone Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone 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 Touchstone Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Exploration has no effect on the direction of InPlay Oil i.e., InPlay Oil and Touchstone Exploration go up and down completely randomly.
Pair Corralation between InPlay Oil and Touchstone Exploration
Assuming the 90 days trading horizon InPlay Oil Corp is expected to under-perform the Touchstone Exploration. But the stock apears to be less risky and, when comparing its historical volatility, InPlay Oil Corp is 1.86 times less risky than Touchstone Exploration. The stock trades about -0.02 of its potential returns per unit of risk. The Touchstone Exploration is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 95.00 in Touchstone Exploration on September 2, 2024 and sell it today you would lose (42.00) from holding Touchstone Exploration or give up 44.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
InPlay Oil Corp vs. Touchstone Exploration
Performance |
| Timeline |
| InPlay Oil Corp |
| Touchstone Exploration |
InPlay Oil and Touchstone Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InPlay Oil and Touchstone Exploration
The main advantage of trading using opposite InPlay Oil and Touchstone Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InPlay Oil position performs unexpectedly, Touchstone 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 Touchstone Exploration will offset losses from the drop in Touchstone Exploration's long position.The idea behind InPlay Oil Corp and Touchstone 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.| Touchstone Exploration vs. Headwater Exploration | Touchstone Exploration vs. Gear Energy | Touchstone Exploration vs. Canacol Energy | Touchstone Exploration vs. InPlay Oil Corp |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |