Correlation Between Precision Drilling and Definity Financial
Can any of the company-specific risk be diversified away by investing in both Precision Drilling and Definity Financial 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 Definity Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Precision Drilling and Definity Financial Corp, you can compare the effects of market volatilities on Precision Drilling and Definity Financial 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 Definity Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precision Drilling and Definity Financial.
Diversification Opportunities for Precision Drilling and Definity Financial
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Precision and Definity is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Precision Drilling and Definity Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Definity Financial Corp 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 Definity Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Definity Financial Corp has no effect on the direction of Precision Drilling i.e., Precision Drilling and Definity Financial go up and down completely randomly.
Pair Corralation between Precision Drilling and Definity Financial
Assuming the 90 days horizon Precision Drilling is expected to generate 1.47 times less return on investment than Definity Financial. In addition to that, Precision Drilling is 1.11 times more volatile than Definity Financial Corp. It trades about 0.09 of its total potential returns per unit of risk. Definity Financial Corp is currently generating about 0.14 per unit of volatility. If you would invest 7,325 in Definity Financial Corp on October 12, 2025 and sell it today you would earn a total of 285.00 from holding Definity Financial Corp or generate 3.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Precision Drilling vs. Definity Financial Corp
Performance |
| Timeline |
| Precision Drilling |
| Definity Financial Corp |
Precision Drilling and Definity Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Precision Drilling and Definity Financial
The main advantage of trading using opposite Precision Drilling and Definity Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precision Drilling position performs unexpectedly, Definity Financial 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 Definity Financial will offset losses from the drop in Definity Financial's long position.| Precision Drilling vs. Trican Well Service | Precision Drilling vs. Pason Systems | Precision Drilling vs. Cardinal Energy | Precision Drilling vs. Kelt Exploration |
| Definity Financial vs. Onex Corp | Definity Financial vs. Hut 8 Mining | Definity Financial vs. Intact Financ 1 | Definity Financial vs. E L Financial 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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