Correlation Between Parex Resources and ARC Resources
Can any of the company-specific risk be diversified away by investing in both Parex Resources and ARC 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 Parex Resources and ARC Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parex Resources and ARC Resources, you can compare the effects of market volatilities on Parex Resources and ARC 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 Parex Resources with a short position of ARC Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parex Resources and ARC Resources.
Diversification Opportunities for Parex Resources and ARC Resources
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Parex and ARC is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Parex Resources and ARC Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARC Resources 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 ARC Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARC Resources has no effect on the direction of Parex Resources i.e., Parex Resources and ARC Resources go up and down completely randomly.
Pair Corralation between Parex Resources and ARC Resources
Assuming the 90 days trading horizon Parex Resources is expected to generate 5.66 times less return on investment than ARC Resources. In addition to that, Parex Resources is 1.22 times more volatile than ARC Resources. It trades about 0.01 of its total potential returns per unit of risk. ARC Resources is currently generating about 0.05 per unit of volatility. If you would invest 1,770 in ARC Resources on August 26, 2024 and sell it today you would earn a total of 906.00 from holding ARC Resources or generate 51.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parex Resources vs. ARC Resources
Performance |
| Timeline |
| Parex Resources |
| ARC Resources |
Parex Resources and ARC Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parex Resources and ARC Resources
The main advantage of trading using opposite Parex Resources and ARC Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parex Resources position performs unexpectedly, ARC 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 ARC Resources will offset losses from the drop in ARC Resources' long position.| Parex Resources vs. Tourmaline Oil Corp | Parex Resources vs. PrairieSky Royalty | Parex Resources vs. ARC Resources | Parex Resources vs. MEG Energy Corp |
| ARC Resources vs. Tourmaline Oil Corp | ARC Resources vs. Whitecap Resources | ARC Resources vs. MEG Energy Corp | ARC Resources vs. Vermilion Energy |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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