Correlation Between Pine Cliff and Gear Energy
Can any of the company-specific risk be diversified away by investing in both Pine Cliff 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 Pine Cliff and Gear Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pine Cliff Energy and Gear Energy, you can compare the effects of market volatilities on Pine Cliff 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 Pine Cliff with a short position of Gear Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pine Cliff and Gear Energy.
Diversification Opportunities for Pine Cliff and Gear Energy
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Pine and Gear is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Pine Cliff Energy and Gear Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gear Energy and Pine Cliff 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 Pine Cliff Energy 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 Pine Cliff i.e., Pine Cliff and Gear Energy go up and down completely randomly.
Pair Corralation between Pine Cliff and Gear Energy
Assuming the 90 days trading horizon Pine Cliff Energy is expected to generate 0.94 times more return on investment than Gear Energy. However, Pine Cliff Energy is 1.06 times less risky than Gear Energy. It trades about -0.01 of its potential returns per unit of risk. Gear Energy is currently generating about -0.03 per unit of risk. If you would invest 106.00 in Pine Cliff Energy on November 19, 2024 and sell it today you would lose (21.00) from holding Pine Cliff Energy or give up 19.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.99% |
| Values | Daily Returns |
Pine Cliff Energy vs. Gear Energy
Performance |
| Timeline |
| Pine Cliff Energy |
| Gear Energy |
Pine Cliff and Gear Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pine Cliff and Gear Energy
The main advantage of trading using opposite Pine Cliff and Gear Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pine Cliff 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.| Pine Cliff vs. Gear Energy | Pine Cliff vs. Headwater Exploration | Pine Cliff vs. Cardinal Energy | Pine Cliff vs. Journey Energy |
| 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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