Correlation Between TrueCar and Pancontinental Oil
Can any of the company-specific risk be diversified away by investing in both TrueCar and Pancontinental Oil 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 TrueCar and Pancontinental Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TrueCar and Pancontinental Oil Gas, you can compare the effects of market volatilities on TrueCar and Pancontinental Oil 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 TrueCar with a short position of Pancontinental Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of TrueCar and Pancontinental Oil.
Diversification Opportunities for TrueCar and Pancontinental Oil
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between TrueCar and Pancontinental is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding TrueCar and Pancontinental Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pancontinental Oil Gas and TrueCar 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 TrueCar are associated (or correlated) with Pancontinental Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pancontinental Oil Gas has no effect on the direction of TrueCar i.e., TrueCar and Pancontinental Oil go up and down completely randomly.
Pair Corralation between TrueCar and Pancontinental Oil
Given the investment horizon of 90 days TrueCar is expected to under-perform the Pancontinental Oil. But the stock apears to be less risky and, when comparing its historical volatility, TrueCar is 3.62 times less risky than Pancontinental Oil. The stock trades about -0.04 of its potential returns per unit of risk. The Pancontinental Oil Gas is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1.90 in Pancontinental Oil Gas on December 7, 2024 and sell it today you would lose (0.91) from holding Pancontinental Oil Gas or give up 47.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.8% |
| Values | Daily Returns |
TrueCar vs. Pancontinental Oil Gas
Performance |
| Timeline |
| TrueCar |
| Pancontinental Oil Gas |
TrueCar and Pancontinental Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TrueCar and Pancontinental Oil
The main advantage of trading using opposite TrueCar and Pancontinental Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TrueCar position performs unexpectedly, Pancontinental Oil 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 Pancontinental Oil will offset losses from the drop in Pancontinental Oil's long position.The idea behind TrueCar and Pancontinental Oil Gas pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Pancontinental Oil vs. Kiwetinohk Energy 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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