Correlation Between Topaz Energy and Dexterra
Can any of the company-specific risk be diversified away by investing in both Topaz Energy and Dexterra 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 Topaz Energy and Dexterra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Topaz Energy Corp and Dexterra Group, you can compare the effects of market volatilities on Topaz Energy and Dexterra 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 Topaz Energy with a short position of Dexterra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Topaz Energy and Dexterra.
Diversification Opportunities for Topaz Energy and Dexterra
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Topaz and Dexterra is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Topaz Energy Corp and Dexterra Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dexterra Group and Topaz Energy 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 Topaz Energy Corp are associated (or correlated) with Dexterra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dexterra Group has no effect on the direction of Topaz Energy i.e., Topaz Energy and Dexterra go up and down completely randomly.
Pair Corralation between Topaz Energy and Dexterra
Assuming the 90 days trading horizon Topaz Energy is expected to generate 2.36 times less return on investment than Dexterra. In addition to that, Topaz Energy is 1.07 times more volatile than Dexterra Group. It trades about 0.16 of its total potential returns per unit of risk. Dexterra Group is currently generating about 0.4 per unit of volatility. If you would invest 624.00 in Dexterra Group on August 29, 2024 and sell it today you would earn a total of 73.00 from holding Dexterra Group or generate 11.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Topaz Energy Corp vs. Dexterra Group
Performance |
| Timeline |
| Topaz Energy Corp |
| Dexterra Group |
Topaz Energy and Dexterra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Topaz Energy and Dexterra
The main advantage of trading using opposite Topaz Energy and Dexterra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Topaz Energy position performs unexpectedly, Dexterra 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 Dexterra will offset losses from the drop in Dexterra's long position.| Topaz Energy vs. Headwater Exploration | Topaz Energy vs. Tamarack Valley Energy | Topaz Energy vs. Freehold Royalties | Topaz Energy vs. Tourmaline Oil Corp |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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