Correlation Between Imperial Res and True North

Can any of the company-specific risk be diversified away by investing in both Imperial Res and True North 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 Imperial Res and True North into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Imperial Res and True North

1.0

Correlation Coefficient

Imperial Res  True North

No risk reduction

The 3 months correlation between Imperial and True is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Imperial Res and True North Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on True North Energy and Imperial Res 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 Imperial Res are associated (or correlated) with True North. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of True North Energy has no effect on the direction of Imperial Res i.e., Imperial Res and True North go up and down completely randomly.

Pair Corralation between Imperial Res and True North

If you would invest  0.01  in True North Energy on December 28, 2024 and sell it today you would earn a total of  0.00  from holding True North Energy or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

Imperial Res  vs.  True North Energy

Imperial Res

Risk-Adjusted Performance

Very Weak

Over the last 90 days Imperial Res has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Imperial Res is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

True North Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days True North Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, True North is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Imperial Res and True North

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

The idea behind Imperial Res and True North Energy 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.