Correlation Between PetroShale and Trek Resources
Can any of the company-specific risk be diversified away by investing in both PetroShale and Trek Resources 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 PetroShale and Trek Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PetroShale and Trek Resources, you can compare the effects of market volatilities on PetroShale and Trek Resources 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 PetroShale with a short position of Trek Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroShale and Trek Resources.
Diversification Opportunities for PetroShale and Trek Resources
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PetroShale and Trek is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding PetroShale and Trek Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trek Resources and PetroShale 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 PetroShale are associated (or correlated) with Trek Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trek Resources has no effect on the direction of PetroShale i.e., PetroShale and Trek Resources go up and down completely randomly.
Pair Corralation between PetroShale and Trek Resources
If you would invest 28.00 in PetroShale on October 23, 2024 and sell it today you would earn a total of 3.00 from holding PetroShale or generate 10.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PetroShale vs. Trek Resources
Performance |
| Timeline |
| PetroShale |
| Trek Resources |
PetroShale and Trek Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PetroShale and Trek Resources
The main advantage of trading using opposite PetroShale and Trek Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroShale position performs unexpectedly, Trek Resources 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 Trek Resources will offset losses from the drop in Trek Resources' long position.| PetroShale vs. Dno ASA | PetroShale vs. Horizon Oil Limited | PetroShale vs. Enwell Energy plc | PetroShale vs. Tullow Oil plc |
| Trek Resources vs. Questerre Energy | Trek Resources vs. Petrus Resources | Trek Resources vs. PetroShale | Trek Resources vs. Pieridae Energy Limited |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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