Correlation Between Stampede Drilling and STEP Energy
Can any of the company-specific risk be diversified away by investing in both Stampede Drilling and STEP 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 Stampede Drilling and STEP Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stampede Drilling and STEP Energy Services, you can compare the effects of market volatilities on Stampede Drilling and STEP 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 Stampede Drilling with a short position of STEP Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stampede Drilling and STEP Energy.
Diversification Opportunities for Stampede Drilling and STEP Energy
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Stampede and STEP is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Stampede Drilling and STEP Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STEP Energy Services 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 STEP Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STEP Energy Services has no effect on the direction of Stampede Drilling i.e., Stampede Drilling and STEP Energy go up and down completely randomly.
Pair Corralation between Stampede Drilling and STEP Energy
Assuming the 90 days horizon Stampede Drilling is expected to generate 16.38 times less return on investment than STEP Energy. In addition to that, Stampede Drilling is 1.04 times more volatile than STEP Energy Services. It trades about 0.0 of its total potential returns per unit of risk. STEP Energy Services is currently generating about 0.05 per unit of volatility. If you would invest 309.00 in STEP Energy Services on August 30, 2024 and sell it today you would earn a total of 201.00 from holding STEP Energy Services or generate 65.05% 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. STEP Energy Services
Performance |
| Timeline |
| Stampede Drilling |
| STEP Energy Services |
Stampede Drilling and STEP Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stampede Drilling and STEP Energy
The main advantage of trading using opposite Stampede Drilling and STEP Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stampede Drilling position performs unexpectedly, STEP 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 STEP Energy will offset losses from the drop in STEP Energy's long position.| Stampede Drilling vs. Canadian Natural Resources | Stampede Drilling vs. Suncor Energy | Stampede Drilling vs. iShares Canadian HYBrid | Stampede Drilling vs. Altagas Cum Red |
| STEP Energy vs. Canadian Natural Resources | STEP Energy vs. Suncor Energy | STEP Energy vs. iShares Canadian HYBrid | STEP Energy vs. Altagas Cum Red |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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