Correlation Between Trican Well and Precision Drilling
Can any of the company-specific risk be diversified away by investing in both Trican Well and Precision Drilling 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 Precision Drilling 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 Precision Drilling, you can compare the effects of market volatilities on Trican Well and Precision Drilling 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 Precision Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trican Well and Precision Drilling.
Diversification Opportunities for Trican Well and Precision Drilling
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Trican and Precision is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Trican Well Service and Precision Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precision Drilling 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 Precision Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precision Drilling has no effect on the direction of Trican Well i.e., Trican Well and Precision Drilling go up and down completely randomly.
Pair Corralation between Trican Well and Precision Drilling
Assuming the 90 days trading horizon Trican Well Service is expected to generate 0.84 times more return on investment than Precision Drilling. However, Trican Well Service is 1.19 times less risky than Precision Drilling. It trades about 0.04 of its potential returns per unit of risk. Precision Drilling is currently generating about 0.01 per unit of risk. If you would invest 348.00 in Trican Well Service on August 27, 2024 and sell it today you would earn a total of 149.00 from holding Trican Well Service or generate 42.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trican Well Service vs. Precision Drilling
Performance |
| Timeline |
| Trican Well Service |
| Precision Drilling |
Trican Well and Precision Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trican Well and Precision Drilling
The main advantage of trading using opposite Trican Well and Precision Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trican Well position performs unexpectedly, Precision Drilling 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 Precision Drilling will offset losses from the drop in Precision Drilling'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 |
| Precision Drilling vs. Trican Well Service | Precision Drilling vs. Ensign Energy Services | Precision Drilling vs. Calfrac Well Services | Precision Drilling vs. Birchcliff 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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