Correlation Between Stampede Drilling and New Zealand
Can any of the company-specific risk be diversified away by investing in both Stampede Drilling and New Zealand 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 Stampede Drilling and New Zealand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stampede Drilling and New Zealand Energy, you can compare the effects of market volatilities on Stampede Drilling and New Zealand 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 Stampede Drilling with a short position of New Zealand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stampede Drilling and New Zealand.
Diversification Opportunities for Stampede Drilling and New Zealand
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Stampede and New is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Stampede Drilling and New Zealand Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Zealand Energy and Stampede Drilling 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 Stampede Drilling are associated (or correlated) with New Zealand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Zealand Energy has no effect on the direction of Stampede Drilling i.e., Stampede Drilling and New Zealand go up and down completely randomly.
Pair Corralation between Stampede Drilling and New Zealand
Assuming the 90 days horizon Stampede Drilling is expected to under-perform the New Zealand. But the stock apears to be less risky and, when comparing its historical volatility, Stampede Drilling is 4.9 times less risky than New Zealand. The stock trades about -0.06 of its potential returns per unit of risk. The New Zealand Energy is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 55.00 in New Zealand Energy on September 13, 2024 and sell it today you would earn a total of 44.00 from holding New Zealand Energy or generate 80.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stampede Drilling vs. New Zealand Energy
Performance |
| Timeline |
| Stampede Drilling |
| New Zealand Energy |
Stampede Drilling and New Zealand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stampede Drilling and New Zealand
The main advantage of trading using opposite Stampede Drilling and New Zealand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stampede Drilling position performs unexpectedly, New Zealand 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 New Zealand will offset losses from the drop in New Zealand's long position.| Stampede Drilling vs. Trican Well Service | Stampede Drilling vs. Ensign Energy Services | Stampede Drilling vs. Calfrac Well Services | Stampede Drilling vs. Birchcliff Energy |
| New Zealand vs. Arbor Metals Corp | New Zealand vs. Gamehost | New Zealand vs. Diamond Estates Wines | New Zealand vs. Contagious Gaming |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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