Correlation Between InPlay Oil and North American

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

Diversification Opportunities for InPlay Oil and North American

-0.75

Correlation Coefficient

InPlay Oil  North American

Pay attention - limited upside

The 3 months correlation between InPlay and North is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp and North American Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North American Const 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 North American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North American Const has no effect on the direction of InPlay Oil i.e., InPlay Oil and North American go up and down completely randomly.

Pair Corralation between InPlay Oil and North American

Assuming the 90 days trading horizon InPlay Oil Corp is expected to under-perform the North American. But the stock apears to be less risky and, when comparing its historical volatility, InPlay Oil Corp is 1.18 times less risky than North American. The stock trades about -0.03 of its potential returns per unit of risk. The North American Construction is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,893  in North American Construction on October 11, 2024 and sell it today you would earn a total of  1,030  from holding North American Construction or generate 54.41% return on investment over 90 days.

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

InPlay Oil Corp  vs.  North American Construction

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 February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

North American Const

Risk-Adjusted Performance

6 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in North American Construction are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, North American displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with InPlay Oil and North American

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

The idea behind InPlay Oil Corp and North American Construction 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.