Correlation Between Sage Potash and Topaz Energy
Can any of the company-specific risk be diversified away by investing in both Sage Potash and Topaz 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 Sage Potash and Topaz Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sage Potash Corp and Topaz Energy Corp, you can compare the effects of market volatilities on Sage Potash and Topaz 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 Sage Potash with a short position of Topaz Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sage Potash and Topaz Energy.
Diversification Opportunities for Sage Potash and Topaz Energy
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sage and Topaz is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sage Potash Corp and Topaz Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Topaz Energy Corp and Sage Potash 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 Sage Potash Corp are associated (or correlated) with Topaz Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Topaz Energy Corp has no effect on the direction of Sage Potash i.e., Sage Potash and Topaz Energy go up and down completely randomly.
Pair Corralation between Sage Potash and Topaz Energy
Assuming the 90 days trading horizon Sage Potash Corp is expected to generate 6.28 times more return on investment than Topaz Energy. However, Sage Potash is 6.28 times more volatile than Topaz Energy Corp. It trades about 0.07 of its potential returns per unit of risk. Topaz Energy Corp is currently generating about 0.15 per unit of risk. If you would invest 19.00 in Sage Potash Corp on September 1, 2024 and sell it today you would earn a total of 1.00 from holding Sage Potash Corp or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sage Potash Corp vs. Topaz Energy Corp
Performance |
| Timeline |
| Sage Potash Corp |
| Topaz Energy Corp |
Sage Potash and Topaz Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sage Potash and Topaz Energy
The main advantage of trading using opposite Sage Potash and Topaz Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sage Potash position performs unexpectedly, Topaz 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 Topaz Energy will offset losses from the drop in Topaz Energy's long position.| Sage Potash vs. Enbridge Pref 5 | Sage Potash vs. Enbridge Pref 11 | Sage Potash vs. Enbridge Pref L | Sage Potash vs. E Split Corp |
| Topaz Energy vs. Headwater Exploration | Topaz Energy vs. Tamarack Valley Energy | Topaz Energy vs. Freehold Royalties | Topaz Energy vs. Tourmaline Oil Corp |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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