Correlation Between Prairie Provident and Touchstone Exploration
Can any of the company-specific risk be diversified away by investing in both Prairie Provident and Touchstone Exploration 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 Prairie Provident and Touchstone Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prairie Provident Resources and Touchstone Exploration, you can compare the effects of market volatilities on Prairie Provident and Touchstone Exploration 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 Prairie Provident with a short position of Touchstone Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prairie Provident and Touchstone Exploration.
Diversification Opportunities for Prairie Provident and Touchstone Exploration
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prairie and Touchstone is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Prairie Provident Resources and Touchstone Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Exploration and Prairie Provident 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 Prairie Provident Resources are associated (or correlated) with Touchstone Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Exploration has no effect on the direction of Prairie Provident i.e., Prairie Provident and Touchstone Exploration go up and down completely randomly.
Pair Corralation between Prairie Provident and Touchstone Exploration
Assuming the 90 days trading horizon Prairie Provident Resources is expected to generate 2.03 times more return on investment than Touchstone Exploration. However, Prairie Provident is 2.03 times more volatile than Touchstone Exploration. It trades about 0.26 of its potential returns per unit of risk. Touchstone Exploration is currently generating about 0.22 per unit of risk. If you would invest 3.50 in Prairie Provident Resources on October 25, 2024 and sell it today you would earn a total of 1.50 from holding Prairie Provident Resources or generate 42.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prairie Provident Resources vs. Touchstone Exploration
Performance |
| Timeline |
| Prairie Provident |
| Touchstone Exploration |
Prairie Provident and Touchstone Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prairie Provident and Touchstone Exploration
The main advantage of trading using opposite Prairie Provident and Touchstone Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prairie Provident position performs unexpectedly, Touchstone Exploration 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 Touchstone Exploration will offset losses from the drop in Touchstone Exploration's long position.| Prairie Provident vs. Pine Cliff Energy | Prairie Provident vs. InPlay Oil Corp | Prairie Provident vs. Journey Energy |
| Touchstone Exploration vs. Headwater Exploration | Touchstone Exploration vs. Gear Energy | Touchstone Exploration vs. Canacol Energy | Touchstone Exploration vs. InPlay Oil 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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