Correlation Between Precision Drilling and Pace Metals
Can any of the company-specific risk be diversified away by investing in both Precision Drilling and Pace Metals 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 Pace Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Precision Drilling and Pace Metals, you can compare the effects of market volatilities on Precision Drilling and Pace Metals 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 Pace Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precision Drilling and Pace Metals.
Diversification Opportunities for Precision Drilling and Pace Metals
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Precision and Pace is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Precision Drilling and Pace Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Metals 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 Pace Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Metals has no effect on the direction of Precision Drilling i.e., Precision Drilling and Pace Metals go up and down completely randomly.
Pair Corralation between Precision Drilling and Pace Metals
Assuming the 90 days horizon Precision Drilling is expected to generate 0.7 times more return on investment than Pace Metals. However, Precision Drilling is 1.43 times less risky than Pace Metals. It trades about 0.1 of its potential returns per unit of risk. Pace Metals is currently generating about -0.1 per unit of risk. If you would invest 8,272 in Precision Drilling on October 14, 2024 and sell it today you would earn a total of 1,073 from holding Precision Drilling or generate 12.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Precision Drilling vs. Pace Metals
Performance |
| Timeline |
| Precision Drilling |
| Pace Metals |
Precision Drilling and Pace Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Precision Drilling and Pace Metals
The main advantage of trading using opposite Precision Drilling and Pace Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precision Drilling position performs unexpectedly, Pace Metals 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 Pace Metals will offset losses from the drop in Pace Metals' 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 |
| Pace Metals vs. Rogers Communications | Pace Metals vs. Cogeco Communications | Pace Metals vs. Osisko Metals | Pace Metals vs. Precision Drilling |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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