Correlation Between PetroShale and Tullow Oil
Can any of the company-specific risk be diversified away by investing in both PetroShale and Tullow Oil 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 Tullow Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PetroShale and Tullow Oil PLC, you can compare the effects of market volatilities on PetroShale and Tullow Oil 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 Tullow Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroShale and Tullow Oil.
Diversification Opportunities for PetroShale and Tullow Oil
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PetroShale and Tullow is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding PetroShale and Tullow Oil PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tullow Oil PLC 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 Tullow Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tullow Oil PLC has no effect on the direction of PetroShale i.e., PetroShale and Tullow Oil go up and down completely randomly.
Pair Corralation between PetroShale and Tullow Oil
Assuming the 90 days horizon PetroShale is expected to generate 0.16 times more return on investment than Tullow Oil. However, PetroShale is 6.19 times less risky than Tullow Oil. It trades about 0.01 of its potential returns per unit of risk. Tullow Oil PLC is currently generating about -0.09 per unit of risk. If you would invest 30.00 in PetroShale on November 4, 2024 and sell it today you would earn a total of 0.00 from holding PetroShale or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PetroShale vs. Tullow Oil PLC
Performance |
| Timeline |
| PetroShale |
| Tullow Oil PLC |
PetroShale and Tullow Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PetroShale and Tullow Oil
The main advantage of trading using opposite PetroShale and Tullow Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroShale position performs unexpectedly, Tullow Oil 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 Tullow Oil will offset losses from the drop in Tullow Oil's long position.| PetroShale vs. Dno ASA | PetroShale vs. Horizon Oil Limited | PetroShale vs. Enwell Energy plc | PetroShale vs. Tullow Oil plc |
| Tullow Oil vs. San Leon Energy | Tullow Oil vs. Dno ASA | Tullow Oil vs. PetroShale | Tullow Oil vs. Horizon Oil 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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