Correlation Between InPlay Oil and ARC Resources

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

Diversification Opportunities for InPlay Oil and ARC Resources

0.0

Correlation Coefficient

InPlay Oil  ARC Resources

Pay attention - limited upside

The 3 months correlation between InPlay and ARC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp and ARC Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARC Resources 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 ARC Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARC Resources has no effect on the direction of InPlay Oil i.e., InPlay Oil and ARC Resources go up and down completely randomly.

Pair Corralation between InPlay Oil and ARC Resources

If you would invest (100.00) in ARC Resources on December 28, 2024 and sell it today you would earn a total of  100.00  from holding ARC Resources or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

InPlay Oil Corp  vs.  ARC Resources

InPlay Oil Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days InPlay Oil Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, InPlay Oil is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ARC Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days ARC Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ARC Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with InPlay Oil and ARC Resources

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

The idea behind InPlay Oil Corp and ARC Resources 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.