Correlation Between Southern Energy and InPlay Oil
Can any of the company-specific risk be diversified away by investing in both Southern Energy and InPlay Oil 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 Southern Energy and InPlay Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Energy Corp and InPlay Oil Corp, you can compare the effects of market volatilities on Southern Energy and InPlay Oil 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 Southern Energy with a short position of InPlay Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Energy and InPlay Oil.
Diversification Opportunities for Southern Energy and InPlay Oil
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Southern and InPlay is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Southern Energy Corp and InPlay Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InPlay Oil Corp and Southern Energy 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 Southern Energy Corp are associated (or correlated) with InPlay Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InPlay Oil Corp has no effect on the direction of Southern Energy i.e., Southern Energy and InPlay Oil go up and down completely randomly.
Pair Corralation between Southern Energy and InPlay Oil
Assuming the 90 days horizon Southern Energy Corp is expected to generate 3.13 times more return on investment than InPlay Oil. However, Southern Energy is 3.13 times more volatile than InPlay Oil Corp. It trades about 0.03 of its potential returns per unit of risk. InPlay Oil Corp is currently generating about -0.11 per unit of risk. If you would invest 12.00 in Southern Energy Corp on August 30, 2024 and sell it today you would earn a total of 0.00 from holding Southern Energy Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Southern Energy Corp vs. InPlay Oil Corp
Performance |
| Timeline |
| Southern Energy Corp |
| InPlay Oil Corp |
Southern Energy and InPlay Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Energy and InPlay Oil
The main advantage of trading using opposite Southern Energy and InPlay Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Energy position performs unexpectedly, InPlay Oil 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 InPlay Oil will offset losses from the drop in InPlay Oil's long position.| Southern Energy vs. Pine Cliff Energy | Southern Energy vs. Lucero Energy Corp | Southern Energy vs. Pieridae Energy |
| InPlay Oil vs. Gear Energy | InPlay Oil vs. Journey Energy | InPlay Oil vs. Yangarra Resources | InPlay Oil vs. Obsidian 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |