Correlation Between Gibson Energy and Parkland Fuel

Can any of the company-specific risk be diversified away by investing in both Gibson Energy and Parkland Fuel 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 Gibson Energy and Parkland Fuel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gibson Energy and Parkland Fuel, you can compare the effects of market volatilities on Gibson Energy and Parkland Fuel 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 Gibson Energy with a short position of Parkland Fuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gibson Energy and Parkland Fuel.

Diversification Opportunities for Gibson Energy and Parkland Fuel

-0.02

Correlation Coefficient

Gibson Energy  Parkland Fuel

Good diversification

The 3 months correlation between Gibson and Parkland is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Gibson Energy and Parkland Fuel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parkland Fuel and Gibson 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 Gibson Energy are associated (or correlated) with Parkland Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parkland Fuel has no effect on the direction of Gibson Energy i.e., Gibson Energy and Parkland Fuel go up and down completely randomly.

Pair Corralation between Gibson Energy and Parkland Fuel

Assuming the 90 days trading horizon Gibson Energy is expected to generate 0.58 times more return on investment than Parkland Fuel. However, Gibson Energy is 1.73 times less risky than Parkland Fuel. It trades about 0.15 of its potential returns per unit of risk. Parkland Fuel is currently generating about 0.04 per unit of risk. If you would invest  2,166  in Gibson Energy on September 3, 2024 and sell it today you would earn a total of  195.00  from holding Gibson Energy or generate 9.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Gibson Energy  vs.  Parkland Fuel

Gibson Energy

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gibson Energy are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Gibson Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Parkland Fuel

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Parkland Fuel are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Parkland Fuel is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Gibson Energy and Parkland Fuel

The main advantage of trading using opposite Gibson Energy and Parkland Fuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gibson Energy position performs unexpectedly, Parkland Fuel 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 Parkland Fuel will offset losses from the drop in Parkland Fuel's long position.

The idea behind Gibson Energy and Parkland Fuel 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.