Correlation Between Gear Energy and Peyto ExplorationDevel

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

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

Diversification Opportunities for Gear Energy and Peyto ExplorationDevel

-0.34

Correlation Coefficient

Gear Energy  Peyto ExplorationDevel

Very good diversification

The 3 months correlation between Gear and Peyto is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Gear Energy and Peyto ExplorationDevelopment C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peyto ExplorationDevel and Gear 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 Gear Energy are associated (or correlated) with Peyto ExplorationDevel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peyto ExplorationDevel has no effect on the direction of Gear Energy i.e., Gear Energy and Peyto ExplorationDevel go up and down completely randomly.

Pair Corralation between Gear Energy and Peyto ExplorationDevel

Assuming the 90 days horizon Gear Energy is expected to under-perform the Peyto ExplorationDevel. In addition to that, Gear Energy is 1.53 times more volatile than Peyto ExplorationDevelopment Corp. It trades about -0.1 of its total potential returns per unit of risk. Peyto ExplorationDevelopment Corp is currently generating about 0.16 per unit of volatility. If you would invest  1,026  in Peyto ExplorationDevelopment Corp on September 3, 2024 and sell it today you would earn a total of  163.00  from holding Peyto ExplorationDevelopment Corp or generate 15.89% return on investment over 90 days.

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

Gear Energy  vs.  Peyto ExplorationDevelopment C

Gear Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gear Energy 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 technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Peyto ExplorationDevel

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Peyto ExplorationDevelopment Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Peyto ExplorationDevel reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gear Energy and Peyto ExplorationDevel

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

The idea behind Gear Energy and Peyto ExplorationDevelopment Corp 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.