Correlation Between Kelt Exploration and PrairieSky Royalty
Can any of the company-specific risk be diversified away by investing in both Kelt Exploration and PrairieSky Royalty 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 Kelt Exploration and PrairieSky Royalty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kelt Exploration and PrairieSky Royalty, you can compare the effects of market volatilities on Kelt Exploration and PrairieSky Royalty 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 Kelt Exploration with a short position of PrairieSky Royalty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kelt Exploration and PrairieSky Royalty.
Diversification Opportunities for Kelt Exploration and PrairieSky Royalty
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kelt and PrairieSky is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Kelt Exploration and PrairieSky Royalty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PrairieSky Royalty and Kelt Exploration 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 Kelt Exploration are associated (or correlated) with PrairieSky Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PrairieSky Royalty has no effect on the direction of Kelt Exploration i.e., Kelt Exploration and PrairieSky Royalty go up and down completely randomly.
Pair Corralation between Kelt Exploration and PrairieSky Royalty
Assuming the 90 days horizon Kelt Exploration is expected to generate 1.53 times less return on investment than PrairieSky Royalty. In addition to that, Kelt Exploration is 1.51 times more volatile than PrairieSky Royalty. It trades about 0.03 of its total potential returns per unit of risk. PrairieSky Royalty is currently generating about 0.07 per unit of volatility. If you would invest 1,765 in PrairieSky Royalty on September 1, 2024 and sell it today you would earn a total of 346.00 from holding PrairieSky Royalty or generate 19.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kelt Exploration vs. PrairieSky Royalty
Performance |
| Timeline |
| Kelt Exploration |
| PrairieSky Royalty |
Kelt Exploration and PrairieSky Royalty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kelt Exploration and PrairieSky Royalty
The main advantage of trading using opposite Kelt Exploration and PrairieSky Royalty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kelt Exploration position performs unexpectedly, PrairieSky Royalty 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 PrairieSky Royalty will offset losses from the drop in PrairieSky Royalty's long position.| Kelt Exploration vs. ROK Resources | Kelt Exploration vs. PetroShale | Kelt Exploration vs. Pieridae Energy Limited | Kelt Exploration vs. Bengal Energy |
| PrairieSky Royalty vs. Petroleo Brasileiro Petrobras | PrairieSky Royalty vs. Equinor ASA ADR | PrairieSky Royalty vs. Eni SpA ADR | PrairieSky Royalty vs. YPF Sociedad Anonima |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |