Correlation Between Stroud Resources and Prairie Provident
Can any of the company-specific risk be diversified away by investing in both Stroud Resources and Prairie Provident 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 Stroud Resources and Prairie Provident into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stroud Resources and Prairie Provident Resources, you can compare the effects of market volatilities on Stroud Resources and Prairie Provident 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 Stroud Resources with a short position of Prairie Provident. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stroud Resources and Prairie Provident.
Diversification Opportunities for Stroud Resources and Prairie Provident
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Stroud and Prairie is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Stroud Resources and Prairie Provident Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prairie Provident and Stroud Resources 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 Stroud Resources are associated (or correlated) with Prairie Provident. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prairie Provident has no effect on the direction of Stroud Resources i.e., Stroud Resources and Prairie Provident go up and down completely randomly.
Pair Corralation between Stroud Resources and Prairie Provident
Assuming the 90 days horizon Stroud Resources is expected to generate 2.56 times more return on investment than Prairie Provident. However, Stroud Resources is 2.56 times more volatile than Prairie Provident Resources. It trades about 0.14 of its potential returns per unit of risk. Prairie Provident Resources is currently generating about 0.26 per unit of risk. If you would invest 5.00 in Stroud Resources on October 25, 2024 and sell it today you would earn a total of 1.00 from holding Stroud Resources or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stroud Resources vs. Prairie Provident Resources
Performance |
| Timeline |
| Stroud Resources |
| Prairie Provident |
Stroud Resources and Prairie Provident Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stroud Resources and Prairie Provident
The main advantage of trading using opposite Stroud Resources and Prairie Provident positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stroud Resources position performs unexpectedly, Prairie Provident 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 Prairie Provident will offset losses from the drop in Prairie Provident's long position.| Stroud Resources vs. Brookfield Asset Management | Stroud Resources vs. Maple Peak Investments | Stroud Resources vs. Canadian Utilities Limited | Stroud Resources vs. Partners Value Investments |
| Prairie Provident vs. Pine Cliff Energy | Prairie Provident vs. InPlay Oil Corp | Prairie Provident vs. Journey 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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