Correlation Between WesCan Energy and Gear Energy
Can any of the company-specific risk be diversified away by investing in both WesCan Energy and Gear Energy 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 WesCan Energy and Gear Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WesCan Energy Corp and Gear Energy, you can compare the effects of market volatilities on WesCan Energy and Gear Energy 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 WesCan Energy with a short position of Gear Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of WesCan Energy and Gear Energy.
Diversification Opportunities for WesCan Energy and Gear Energy
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between WesCan and Gear is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding WesCan Energy Corp and Gear Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gear Energy and WesCan 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 WesCan Energy Corp are associated (or correlated) with Gear Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gear Energy has no effect on the direction of WesCan Energy i.e., WesCan Energy and Gear Energy go up and down completely randomly.
Pair Corralation between WesCan Energy and Gear Energy
Assuming the 90 days horizon WesCan Energy Corp is expected to under-perform the Gear Energy. In addition to that, WesCan Energy is 1.87 times more volatile than Gear Energy. It trades about -0.07 of its total potential returns per unit of risk. Gear Energy is currently generating about -0.02 per unit of volatility. If you would invest 51.00 in Gear Energy on September 13, 2024 and sell it today you would lose (1.00) from holding Gear Energy or give up 1.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WesCan Energy Corp vs. Gear Energy
Performance |
| Timeline |
| WesCan Energy Corp |
| Gear Energy |
WesCan Energy and Gear Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WesCan Energy and Gear Energy
The main advantage of trading using opposite WesCan Energy and Gear Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WesCan Energy position performs unexpectedly, Gear Energy 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 Gear Energy will offset losses from the drop in Gear Energy's long position.| WesCan Energy vs. Prospera Energy | WesCan Energy vs. Prairie Provident Resources | WesCan Energy vs. Vital Energy |
| Gear Energy vs. Cardinal Energy | Gear Energy vs. Tamarack Valley Energy | Gear Energy vs. Athabasca Oil Corp | Gear Energy vs. Headwater Exploration |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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