Correlation Between Trican Well and Pason Systems
Can any of the company-specific risk be diversified away by investing in both Trican Well and Pason Systems 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 Pason Systems 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 Pason Systems, you can compare the effects of market volatilities on Trican Well and Pason Systems 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 Pason Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trican Well and Pason Systems.
Diversification Opportunities for Trican Well and Pason Systems
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Trican and Pason is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Trican Well Service and Pason Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pason Systems 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 Pason Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pason Systems has no effect on the direction of Trican Well i.e., Trican Well and Pason Systems go up and down completely randomly.
Pair Corralation between Trican Well and Pason Systems
Assuming the 90 days trading horizon Trican Well Service is expected to generate 1.53 times more return on investment than Pason Systems. However, Trican Well is 1.53 times more volatile than Pason Systems. It trades about -0.1 of its potential returns per unit of risk. Pason Systems is currently generating about -0.25 per unit of risk. If you would invest 484.00 in Trican Well Service on November 28, 2024 and sell it today you would lose (25.00) from holding Trican Well Service or give up 5.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trican Well Service vs. Pason Systems
Performance |
| Timeline |
| Trican Well Service |
| Pason Systems |
Trican Well and Pason Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trican Well and Pason Systems
The main advantage of trading using opposite Trican Well and Pason Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trican Well position performs unexpectedly, Pason Systems 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 Pason Systems will offset losses from the drop in Pason Systems' long position.| Trican Well vs. Calfrac Well Services | Trican Well vs. Precision Drilling | Trican Well vs. Ensign Energy Services | Trican Well vs. Birchcliff Energy |
| Pason Systems vs. Enerflex | Pason Systems vs. Mullen Group | Pason Systems vs. Secure Energy Services | Pason Systems vs. Ensign Energy Services |
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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