Correlation Between ProAm Explorations and Gear Energy
Can any of the company-specific risk be diversified away by investing in both ProAm Explorations and Gear Energy 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 ProAm Explorations and Gear Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProAm Explorations Corp and Gear Energy, you can compare the effects of market volatilities on ProAm Explorations and Gear Energy 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 ProAm Explorations with a short position of Gear Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProAm Explorations and Gear Energy.
Diversification Opportunities for ProAm Explorations and Gear Energy
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ProAm and Gear is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding ProAm Explorations Corp and Gear Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gear Energy and ProAm Explorations 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 ProAm Explorations Corp are associated (or correlated) with Gear Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gear Energy has no effect on the direction of ProAm Explorations i.e., ProAm Explorations and Gear Energy go up and down completely randomly.
Pair Corralation between ProAm Explorations and Gear Energy
Assuming the 90 days horizon ProAm Explorations Corp is expected to under-perform the Gear Energy. In addition to that, ProAm Explorations is 2.91 times more volatile than Gear Energy. It trades about -0.06 of its total potential returns per unit of risk. Gear Energy is currently generating about -0.09 per unit of volatility. If you would invest 60.00 in Gear Energy on September 12, 2024 and sell it today you would lose (10.00) from holding Gear Energy or give up 16.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
ProAm Explorations Corp vs. Gear Energy
Performance |
| Timeline |
| ProAm Explorations Corp |
| Gear Energy |
ProAm Explorations and Gear Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProAm Explorations and Gear Energy
The main advantage of trading using opposite ProAm Explorations and Gear Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProAm Explorations position performs unexpectedly, Gear Energy 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 Gear Energy will offset losses from the drop in Gear Energy's long position.| ProAm Explorations vs. Enbridge Pref 5 | ProAm Explorations vs. Enbridge Pref 11 | ProAm Explorations vs. Enbridge Pref L | ProAm Explorations vs. E Split Corp |
| Gear Energy vs. Cardinal Energy | Gear Energy vs. Tamarack Valley Energy | Gear Energy vs. Athabasca Oil Corp | Gear Energy vs. Headwater Exploration |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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