Correlation Between MEG Energy and Peyto ExplorationDevel
Can any of the company-specific risk be diversified away by investing in both MEG Energy and Peyto ExplorationDevel 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 MEG Energy and Peyto ExplorationDevel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MEG Energy Corp and Peyto ExplorationDevelopment Corp, you can compare the effects of market volatilities on MEG Energy and Peyto ExplorationDevel 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 MEG Energy with a short position of Peyto ExplorationDevel. Check out your portfolio center. Please also check ongoing floating volatility patterns of MEG Energy and Peyto ExplorationDevel.
Diversification Opportunities for MEG Energy and Peyto ExplorationDevel
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between MEG and Peyto is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding MEG Energy Corp and Peyto ExplorationDevelopment C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peyto ExplorationDevel and MEG Energy 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 MEG Energy Corp are associated (or correlated) with Peyto ExplorationDevel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peyto ExplorationDevel has no effect on the direction of MEG Energy i.e., MEG Energy and Peyto ExplorationDevel go up and down completely randomly.
Pair Corralation between MEG Energy and Peyto ExplorationDevel
Assuming the 90 days horizon MEG Energy Corp is expected to generate 1.67 times more return on investment than Peyto ExplorationDevel. However, MEG Energy is 1.67 times more volatile than Peyto ExplorationDevelopment Corp. It trades about -0.06 of its potential returns per unit of risk. Peyto ExplorationDevelopment Corp is currently generating about -0.21 per unit of risk. If you would invest 1,663 in MEG Energy Corp on November 2, 2024 and sell it today you would lose (56.00) from holding MEG Energy Corp or give up 3.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MEG Energy Corp vs. Peyto ExplorationDevelopment C
Performance |
| Timeline |
| MEG Energy Corp |
| Peyto ExplorationDevel |
MEG Energy and Peyto ExplorationDevel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MEG Energy and Peyto ExplorationDevel
The main advantage of trading using opposite MEG Energy and Peyto ExplorationDevel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MEG Energy position performs unexpectedly, Peyto ExplorationDevel 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 Peyto ExplorationDevel will offset losses from the drop in Peyto ExplorationDevel's long position.| MEG Energy vs. Gear Energy | MEG Energy vs. Tamarack Valley Energy | MEG Energy vs. Cardinal Energy | MEG Energy vs. Whitecap Resources |
| Peyto ExplorationDevel vs. Birchcliff Energy | Peyto ExplorationDevel vs. Tamarack Valley Energy | Peyto ExplorationDevel vs. Gear Energy | Peyto ExplorationDevel vs. Spartan Delta 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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