Correlation Between InPlay Oil and Guidewire Software

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Can any of the company-specific risk be diversified away by investing in both InPlay Oil and Guidewire Software 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 InPlay Oil and Guidewire Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InPlay Oil Corp and Guidewire Software, you can compare the effects of market volatilities on InPlay Oil and Guidewire Software 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 InPlay Oil with a short position of Guidewire Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of InPlay Oil and Guidewire Software.

Diversification Opportunities for InPlay Oil and Guidewire Software

-0.13
  Correlation Coefficient

Good diversification

The 3 months correlation between InPlay and Guidewire is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp and Guidewire Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidewire Software and InPlay Oil 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 InPlay Oil Corp are associated (or correlated) with Guidewire Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidewire Software has no effect on the direction of InPlay Oil i.e., InPlay Oil and Guidewire Software go up and down completely randomly.

Pair Corralation between InPlay Oil and Guidewire Software

Assuming the 90 days trading horizon InPlay Oil Corp is expected to under-perform the Guidewire Software. But the stock apears to be less risky and, when comparing its historical volatility, InPlay Oil Corp is 2.82 times less risky than Guidewire Software. The stock trades about -0.51 of its potential returns per unit of risk. The Guidewire Software is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  19,315  in Guidewire Software on September 26, 2024 and sell it today you would lose (2,410) from holding Guidewire Software or give up 12.48% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

InPlay Oil Corp  vs.  Guidewire Software

 Performance 
       Timeline  
InPlay Oil Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days InPlay Oil Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
Guidewire Software 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Guidewire Software are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Guidewire Software may actually be approaching a critical reversion point that can send shares even higher in January 2025.

InPlay Oil and Guidewire Software Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with InPlay Oil and Guidewire Software

The main advantage of trading using opposite InPlay Oil and Guidewire Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InPlay Oil position performs unexpectedly, Guidewire Software 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 Guidewire Software will offset losses from the drop in Guidewire Software's long position.
The idea behind InPlay Oil Corp and Guidewire Software 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.
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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