Correlation Between Laredo Oil and Tullow Oil
Can any of the company-specific risk be diversified away by investing in both Laredo Oil and Tullow Oil 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 Laredo Oil and Tullow Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laredo Oil and Tullow Oil PLC, you can compare the effects of market volatilities on Laredo Oil and Tullow Oil 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 Laredo Oil with a short position of Tullow Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laredo Oil and Tullow Oil.
Diversification Opportunities for Laredo Oil and Tullow Oil
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Laredo and Tullow is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Laredo Oil and Tullow Oil PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tullow Oil PLC and Laredo 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 Laredo Oil are associated (or correlated) with Tullow Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tullow Oil PLC has no effect on the direction of Laredo Oil i.e., Laredo Oil and Tullow Oil go up and down completely randomly.
Pair Corralation between Laredo Oil and Tullow Oil
Given the investment horizon of 90 days Laredo Oil is expected to generate 0.97 times more return on investment than Tullow Oil. However, Laredo Oil is 1.03 times less risky than Tullow Oil. It trades about 0.03 of its potential returns per unit of risk. Tullow Oil PLC is currently generating about -0.05 per unit of risk. If you would invest 43.00 in Laredo Oil on September 1, 2024 and sell it today you would earn a total of 1.00 from holding Laredo Oil or generate 2.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Laredo Oil vs. Tullow Oil PLC
Performance |
| Timeline |
| Laredo Oil |
| Tullow Oil PLC |
Laredo Oil and Tullow Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laredo Oil and Tullow Oil
The main advantage of trading using opposite Laredo Oil and Tullow Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laredo Oil position performs unexpectedly, Tullow Oil 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 Tullow Oil will offset losses from the drop in Tullow Oil's long position.| Laredo Oil vs. Freehold Royalties | Laredo Oil vs. Capricorn Energy PLC | Laredo Oil vs. PrairieSky Royalty | Laredo Oil vs. Tamarack Valley Energy |
| Tullow Oil vs. Permian Resources | Tullow Oil vs. Devon Energy | Tullow Oil vs. EOG Resources | Tullow Oil vs. Coterra Energy |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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