Correlation Between Trican Well and Stampede Drilling
Can any of the company-specific risk be diversified away by investing in both Trican Well and Stampede 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 Stampede 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 Stampede Drilling, you can compare the effects of market volatilities on Trican Well and Stampede 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 Stampede Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trican Well and Stampede Drilling.
Diversification Opportunities for Trican Well and Stampede Drilling
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Trican and Stampede is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Trican Well Service and Stampede Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stampede 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 Stampede Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stampede Drilling has no effect on the direction of Trican Well i.e., Trican Well and Stampede Drilling go up and down completely randomly.
Pair Corralation between Trican Well and Stampede Drilling
Assuming the 90 days trading horizon Trican Well Service is expected to generate 0.49 times more return on investment than Stampede Drilling. However, Trican Well Service is 2.04 times less risky than Stampede Drilling. It trades about 0.12 of its potential returns per unit of risk. Stampede Drilling is currently generating about -0.05 per unit of risk. If you would invest 472.00 in Trican Well Service on September 13, 2024 and sell it today you would earn a total of 19.00 from holding Trican Well Service or generate 4.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trican Well Service vs. Stampede Drilling
Performance |
| Timeline |
| Trican Well Service |
| Stampede Drilling |
Trican Well and Stampede Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trican Well and Stampede Drilling
The main advantage of trading using opposite Trican Well and Stampede Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trican Well position performs unexpectedly, Stampede 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 Stampede Drilling will offset losses from the drop in Stampede Drilling's long position.| Trican Well vs. PHX Energy Services | Trican Well vs. CES Energy Solutions | Trican Well vs. Total Energy Services | Trican Well vs. Pason Systems |
| Stampede Drilling vs. STEP Energy Services | Stampede Drilling vs. Southern Energy Corp | Stampede Drilling vs. PHX 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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