Correlation Between Petro Viking and Gear Energy
Can any of the company-specific risk be diversified away by investing in both Petro Viking 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 Petro Viking and Gear Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petro Viking Energy and Gear Energy, you can compare the effects of market volatilities on Petro Viking 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 Petro Viking with a short position of Gear Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petro Viking and Gear Energy.
Diversification Opportunities for Petro Viking and Gear Energy
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Petro and Gear is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Petro Viking Energy and Gear Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gear Energy and Petro Viking 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 Petro Viking 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 Petro Viking i.e., Petro Viking and Gear Energy go up and down completely randomly.
Pair Corralation between Petro Viking and Gear Energy
Assuming the 90 days horizon Petro Viking Energy is expected to generate 44.12 times more return on investment than Gear Energy. However, Petro Viking is 44.12 times more volatile than Gear Energy. It trades about 0.21 of its potential returns per unit of risk. Gear Energy is currently generating about 0.08 per unit of risk. If you would invest 0.84 in Petro Viking Energy on October 23, 2024 and sell it today you would lose (0.04) from holding Petro Viking Energy or give up 4.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Petro Viking Energy vs. Gear Energy
Performance |
| Timeline |
| Petro Viking Energy |
| Gear Energy |
Petro Viking and Gear Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petro Viking and Gear Energy
The main advantage of trading using opposite Petro Viking and Gear Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petro Viking 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.| Petro Viking vs. Avanti Energy | Petro Viking vs. CGX Energy | Petro Viking vs. Royal Helium | Petro Viking vs. Eco Oil Gas |
| Gear Energy vs. Tamarack Valley Energy | Gear Energy vs. MEG Energy Corp | Gear Energy vs. Cardinal Energy | Gear Energy vs. Whitecap Resources |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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