Correlation Between Precision Drilling and Brookfield
Can any of the company-specific risk be diversified away by investing in both Precision Drilling and Brookfield 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 Precision Drilling and Brookfield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Precision Drilling and Brookfield, you can compare the effects of market volatilities on Precision Drilling and Brookfield 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 Precision Drilling with a short position of Brookfield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precision Drilling and Brookfield.
Diversification Opportunities for Precision Drilling and Brookfield
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Precision and Brookfield is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Precision Drilling and Brookfield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield and Precision 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 Precision Drilling are associated (or correlated) with Brookfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield has no effect on the direction of Precision Drilling i.e., Precision Drilling and Brookfield go up and down completely randomly.
Pair Corralation between Precision Drilling and Brookfield
Assuming the 90 days horizon Precision Drilling is expected to generate 2.15 times less return on investment than Brookfield. In addition to that, Precision Drilling is 2.27 times more volatile than Brookfield. It trades about 0.01 of its total potential returns per unit of risk. Brookfield is currently generating about 0.04 per unit of volatility. If you would invest 2,060 in Brookfield on October 27, 2024 and sell it today you would earn a total of 390.00 from holding Brookfield or generate 18.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Precision Drilling vs. Brookfield
Performance |
| Timeline |
| Precision Drilling |
| Brookfield |
Precision Drilling and Brookfield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Precision Drilling and Brookfield
The main advantage of trading using opposite Precision Drilling and Brookfield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precision Drilling position performs unexpectedly, Brookfield 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 Brookfield will offset losses from the drop in Brookfield's long position.| Precision Drilling vs. Trican Well Service | Precision Drilling vs. Ensign Energy Services | Precision Drilling vs. Calfrac Well Services | Precision Drilling vs. Birchcliff Energy |
| Brookfield vs. North American Financial | Brookfield vs. CI Financial Corp | Brookfield vs. Manulife Financial Corp | Brookfield vs. Income Financial Trust |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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