Correlation Between Parex Resources and Advantage Oil
Can any of the company-specific risk be diversified away by investing in both Parex Resources and Advantage 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 Parex Resources and Advantage Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parex Resources and Advantage Oil Gas, you can compare the effects of market volatilities on Parex Resources and Advantage 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 Parex Resources with a short position of Advantage Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parex Resources and Advantage Oil.
Diversification Opportunities for Parex Resources and Advantage Oil
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Parex and Advantage is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Parex Resources and Advantage Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantage Oil Gas and Parex Resources 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 Parex Resources are associated (or correlated) with Advantage Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantage Oil Gas has no effect on the direction of Parex Resources i.e., Parex Resources and Advantage Oil go up and down completely randomly.
Pair Corralation between Parex Resources and Advantage Oil
Assuming the 90 days trading horizon Parex Resources is expected to generate 1.04 times more return on investment than Advantage Oil. However, Parex Resources is 1.04 times more volatile than Advantage Oil Gas. It trades about 0.01 of its potential returns per unit of risk. Advantage Oil Gas is currently generating about 0.0 per unit of risk. If you would invest 1,610 in Parex Resources on August 26, 2024 and sell it today you would lose (86.00) from holding Parex Resources or give up 5.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parex Resources vs. Advantage Oil Gas
Performance |
| Timeline |
| Parex Resources |
| Advantage Oil Gas |
Parex Resources and Advantage Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parex Resources and Advantage Oil
The main advantage of trading using opposite Parex Resources and Advantage Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parex Resources position performs unexpectedly, Advantage 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 Advantage Oil will offset losses from the drop in Advantage Oil's long position.| Parex Resources vs. Tourmaline Oil Corp | Parex Resources vs. PrairieSky Royalty | Parex Resources vs. ARC Resources | Parex Resources vs. MEG Energy Corp |
| Advantage Oil vs. InPlay Oil Corp | Advantage Oil vs. Yangarra Resources | Advantage Oil vs. iShares Canadian HYBrid | Advantage Oil vs. Altagas Cum Red |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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