Correlation Between Stampede Drilling and Solution Financial
Can any of the company-specific risk be diversified away by investing in both Stampede Drilling and Solution Financial 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 Solution Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stampede Drilling and Solution Financial, you can compare the effects of market volatilities on Stampede Drilling and Solution Financial 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 Solution Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stampede Drilling and Solution Financial.
Diversification Opportunities for Stampede Drilling and Solution Financial
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Stampede and Solution is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Stampede Drilling and Solution Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solution Financial 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 Solution Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solution Financial has no effect on the direction of Stampede Drilling i.e., Stampede Drilling and Solution Financial go up and down completely randomly.
Pair Corralation between Stampede Drilling and Solution Financial
Assuming the 90 days horizon Stampede Drilling is expected to under-perform the Solution Financial. In addition to that, Stampede Drilling is 1.14 times more volatile than Solution Financial. It trades about -0.02 of its total potential returns per unit of risk. Solution Financial is currently generating about 0.01 per unit of volatility. If you would invest 31.00 in Solution Financial on October 13, 2024 and sell it today you would lose (3.00) from holding Solution Financial or give up 9.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stampede Drilling vs. Solution Financial
Performance |
| Timeline |
| Stampede Drilling |
| Solution Financial |
Stampede Drilling and Solution Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stampede Drilling and Solution Financial
The main advantage of trading using opposite Stampede Drilling and Solution Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stampede Drilling position performs unexpectedly, Solution Financial 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 Solution Financial will offset losses from the drop in Solution Financial's long position.| Stampede Drilling vs. STEP Energy Services | Stampede Drilling vs. Southern Energy Corp | Stampede Drilling vs. PHX Energy Services |
| Solution Financial vs. Ramp Metals | Solution Financial vs. Leveljump Healthcare Corp | Solution Financial vs. Nova Leap Health | Solution Financial vs. Champion Gaming Group |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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