Correlation Between Tamarack Valley and FAR
Can any of the company-specific risk be diversified away by investing in both Tamarack Valley and FAR 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 Tamarack Valley and FAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tamarack Valley Energy and FAR Limited, you can compare the effects of market volatilities on Tamarack Valley and FAR 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 Tamarack Valley with a short position of FAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tamarack Valley and FAR.
Diversification Opportunities for Tamarack Valley and FAR
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tamarack and FAR is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Tamarack Valley Energy and FAR Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAR Limited and Tamarack Valley 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 Tamarack Valley Energy are associated (or correlated) with FAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAR Limited has no effect on the direction of Tamarack Valley i.e., Tamarack Valley and FAR go up and down completely randomly.
Pair Corralation between Tamarack Valley and FAR
Assuming the 90 days horizon Tamarack Valley is expected to generate 2.52 times less return on investment than FAR. But when comparing it to its historical volatility, Tamarack Valley Energy is 1.31 times less risky than FAR. It trades about 0.02 of its potential returns per unit of risk. FAR Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 22.00 in FAR Limited on September 2, 2024 and sell it today you would earn a total of 7.00 from holding FAR Limited or generate 31.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tamarack Valley Energy vs. FAR Limited
Performance |
| Timeline |
| Tamarack Valley Energy |
| FAR Limited |
Tamarack Valley and FAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tamarack Valley and FAR
The main advantage of trading using opposite Tamarack Valley and FAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tamarack Valley position performs unexpectedly, FAR 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 FAR will offset losses from the drop in FAR's long position.| Tamarack Valley vs. Petroleo Brasileiro Petrobras | Tamarack Valley vs. Equinor ASA ADR | Tamarack Valley vs. Eni SpA ADR | Tamarack Valley vs. YPF Sociedad Anonima |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |