Correlation Between Source Energy and Shawcor
Can any of the company-specific risk be diversified away by investing in both Source Energy and Shawcor 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 Source Energy and Shawcor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Source Energy Services and Shawcor, you can compare the effects of market volatilities on Source Energy and Shawcor 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 Source Energy with a short position of Shawcor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Source Energy and Shawcor.
Diversification Opportunities for Source Energy and Shawcor
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Source and Shawcor is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Source Energy Services and Shawcor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shawcor and Source Energy 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 Source Energy Services are associated (or correlated) with Shawcor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shawcor has no effect on the direction of Source Energy i.e., Source Energy and Shawcor go up and down completely randomly.
Pair Corralation between Source Energy and Shawcor
Assuming the 90 days horizon Source Energy Services is expected to generate 2.31 times more return on investment than Shawcor. However, Source Energy is 2.31 times more volatile than Shawcor. It trades about 0.09 of its potential returns per unit of risk. Shawcor is currently generating about 0.12 per unit of risk. If you would invest 150.00 in Source Energy Services on September 3, 2024 and sell it today you would earn a total of 1,143 from holding Source Energy Services or generate 762.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 30.85% |
| Values | Daily Returns |
Source Energy Services vs. Shawcor
Performance |
| Timeline |
| Source Energy Services |
| Shawcor |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Source Energy and Shawcor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Source Energy and Shawcor
The main advantage of trading using opposite Source Energy and Shawcor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Source Energy position performs unexpectedly, Shawcor 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 Shawcor will offset losses from the drop in Shawcor's long position.| Source Energy vs. Total Energy Services | Source Energy vs. Trican Well Service | Source Energy vs. STEP Energy Services | Source Energy vs. High Arctic Energy |
| Shawcor vs. STEP Energy Services | Shawcor vs. Total Energy Services | Shawcor vs. Trican Well Service | Shawcor vs. High Arctic 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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