Correlation Between InPlay Oil and Dynasty Gold

Can any of the company-specific risk be diversified away by investing in both InPlay Oil and Dynasty Gold 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 Dynasty Gold 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 Dynasty Gold Corp, you can compare the effects of market volatilities on InPlay Oil and Dynasty Gold 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 Dynasty Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of InPlay Oil and Dynasty Gold.

Diversification Opportunities for InPlay Oil and Dynasty Gold

0.34

Correlation Coefficient

InPlay Oil  Dynasty Gold

Weak diversification

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

Pair Corralation between InPlay Oil and Dynasty Gold

Assuming the 90 days trading horizon InPlay Oil Corp is expected to under-perform the Dynasty Gold. But the stock apears to be less risky and, when comparing its historical volatility, InPlay Oil Corp is 3.19 times less risky than Dynasty Gold. The stock trades about -0.14 of its potential returns per unit of risk. The Dynasty Gold Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  16.00  in Dynasty Gold Corp on September 13, 2024 and sell it today you would lose (2.00) from holding Dynasty Gold Corp or give up 12.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

InPlay Oil Corp  vs.  Dynasty Gold Corp

InPlay Oil Corp

Risk-Adjusted Performance

0 of 100

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 unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Dynasty Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dynasty Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Dynasty Gold is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with InPlay Oil and Dynasty Gold

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

The idea behind InPlay Oil Corp and Dynasty Gold 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.