Correlation Between Trican Well and InPlay Oil
Can any of the company-specific risk be diversified away by investing in both Trican Well 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 Trican Well and InPlay Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trican Well Service and InPlay Oil Corp, you can compare the effects of market volatilities on Trican Well 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 Trican Well with a short position of InPlay Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trican Well and InPlay Oil.
Diversification Opportunities for Trican Well and InPlay Oil
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Trican and InPlay is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Trican Well Service 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 Trican Well 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 Trican Well Service 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 Trican Well i.e., Trican Well and InPlay Oil go up and down completely randomly.
Pair Corralation between Trican Well and InPlay Oil
Assuming the 90 days trading horizon Trican Well Service is expected to generate 1.01 times more return on investment than InPlay Oil. However, Trican Well is 1.01 times more volatile than InPlay Oil Corp. It trades about 0.25 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 433.00 in Trican Well Service on August 28, 2024 and sell it today you would earn a total of 51.00 from holding Trican Well Service or generate 11.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trican Well Service vs. InPlay Oil Corp
Performance |
| Timeline |
| Trican Well Service |
| InPlay Oil Corp |
Trican Well and InPlay Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trican Well and InPlay Oil
The main advantage of trading using opposite Trican Well and InPlay Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trican Well 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.| Trican Well vs. Calfrac Well Services | Trican Well vs. Precision Drilling | Trican Well vs. Ensign Energy Services | Trican Well vs. Birchcliff Energy |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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