Correlation Between Major Drilling and Stampede Drilling
Can any of the company-specific risk be diversified away by investing in both Major Drilling and Stampede Drilling 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 Major Drilling and Stampede Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Major Drilling Group and Stampede Drilling, you can compare the effects of market volatilities on Major Drilling and Stampede Drilling 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 Major Drilling with a short position of Stampede Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and Stampede Drilling.
Diversification Opportunities for Major Drilling and Stampede Drilling
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Major and Stampede is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and Stampede Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stampede Drilling and Major Drilling 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 Major Drilling Group are associated (or correlated) with Stampede Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stampede Drilling has no effect on the direction of Major Drilling i.e., Major Drilling and Stampede Drilling go up and down completely randomly.
Pair Corralation between Major Drilling and Stampede Drilling
Assuming the 90 days trading horizon Major Drilling Group is expected to under-perform the Stampede Drilling. But the stock apears to be less risky and, when comparing its historical volatility, Major Drilling Group is 1.64 times less risky than Stampede Drilling. The stock trades about -0.01 of its potential returns per unit of risk. The Stampede Drilling is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 25.00 in Stampede Drilling on November 27, 2024 and sell it today you would lose (8.00) from holding Stampede Drilling or give up 32.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Major Drilling Group vs. Stampede Drilling
Performance |
| Timeline |
| Major Drilling Group |
| Stampede Drilling |
Major Drilling and Stampede Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Major Drilling and Stampede Drilling
The main advantage of trading using opposite Major Drilling and Stampede Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Drilling position performs unexpectedly, Stampede Drilling 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 Stampede Drilling will offset losses from the drop in Stampede Drilling's long position.| Major Drilling vs. Pason Systems | Major Drilling vs. HudBay Minerals | Major Drilling vs. Ensign Energy Services | Major Drilling vs. Precision Drilling |
| Stampede Drilling vs. STEP Energy Services | Stampede Drilling vs. Southern Energy Corp | Stampede Drilling vs. PHX Energy Services |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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