Correlation Between Daybreak Oil and Eco (Atlantic)

Can any of the company-specific risk be diversified away by investing in both Daybreak Oil and Eco (Atlantic) 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 Daybreak Oil and Eco (Atlantic) into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Daybreak Oil and and Eco Oil Gas, you can compare the effects of market volatilities on Daybreak Oil and Eco (Atlantic) 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 Daybreak Oil with a short position of Eco (Atlantic). Check out your portfolio center. Please also check ongoing floating volatility patterns of Daybreak Oil and Eco (Atlantic).

Diversification Opportunities for Daybreak Oil and Eco (Atlantic)

-0.51

Correlation Coefficient

Daybreak Oil  Eco (Atlantic)

Excellent diversification

The 3 months correlation between Daybreak and Eco is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Daybreak Oil and and Eco Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco (Atlantic) and Daybreak 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 Daybreak Oil and are associated (or correlated) with Eco (Atlantic). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco (Atlantic) has no effect on the direction of Daybreak Oil i.e., Daybreak Oil and Eco (Atlantic) go up and down completely randomly.

Pair Corralation between Daybreak Oil and Eco (Atlantic)

Given the investment horizon of 90 days Daybreak Oil and is expected to generate 1.35 times more return on investment than Eco (Atlantic). However, Daybreak Oil is 1.35 times more volatile than Eco Oil Gas. It trades about 0.13 of its potential returns per unit of risk. Eco Oil Gas is currently generating about -0.02 per unit of risk. If you would invest  0.01  in Daybreak Oil and on December 19, 2024 and sell it today you would earn a total of  0.01  from holding Daybreak Oil and or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.65%
Values	Daily Returns

Daybreak Oil and  vs.  Eco Oil Gas

Daybreak Oil

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Daybreak Oil and are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Daybreak Oil displayed solid returns over the last few months and may actually be approaching a breakup point.

Eco (Atlantic)

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eco Oil Gas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Daybreak Oil and Eco (Atlantic)

The main advantage of trading using opposite Daybreak Oil and Eco (Atlantic) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daybreak Oil position performs unexpectedly, Eco (Atlantic) 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 Eco (Atlantic) will offset losses from the drop in Eco (Atlantic)'s long position.

The idea behind Daybreak Oil and and Eco 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.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.