Correlation Between Stampede Drilling and Plata Latina
Can any of the company-specific risk be diversified away by investing in both Stampede Drilling and Plata Latina 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 Plata Latina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stampede Drilling and Plata Latina Minerals, you can compare the effects of market volatilities on Stampede Drilling and Plata Latina 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 Plata Latina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stampede Drilling and Plata Latina.
Diversification Opportunities for Stampede Drilling and Plata Latina
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Stampede and Plata is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Stampede Drilling and Plata Latina Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plata Latina Minerals 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 Plata Latina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plata Latina Minerals has no effect on the direction of Stampede Drilling i.e., Stampede Drilling and Plata Latina go up and down completely randomly.
Pair Corralation between Stampede Drilling and Plata Latina
Assuming the 90 days horizon Stampede Drilling is expected to generate 133.06 times less return on investment than Plata Latina. But when comparing it to its historical volatility, Stampede Drilling is 10.77 times less risky than Plata Latina. It trades about 0.02 of its potential returns per unit of risk. Plata Latina Minerals is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1.00 in Plata Latina Minerals on November 27, 2024 and sell it today you would earn a total of 2.50 from holding Plata Latina Minerals or generate 250.0% 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. Plata Latina Minerals
Performance |
| Timeline |
| Stampede Drilling |
| Plata Latina Minerals |
Stampede Drilling and Plata Latina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stampede Drilling and Plata Latina
The main advantage of trading using opposite Stampede Drilling and Plata Latina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stampede Drilling position performs unexpectedly, Plata Latina 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 Plata Latina will offset losses from the drop in Plata Latina's long position.| Stampede Drilling vs. STEP Energy Services | Stampede Drilling vs. Southern Energy Corp | Stampede Drilling vs. PHX Energy Services |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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