Correlation Between Invictus Energy and Calfrac Well

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

By analyzing existing cross correlation between Invictus Energy Limited and Calfrac Well Services, you can compare the effects of market volatilities on Invictus Energy and Calfrac Well 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 Invictus Energy with a short position of Calfrac Well. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invictus Energy and Calfrac Well.

Diversification Opportunities for Invictus Energy and Calfrac Well

0.05

Correlation Coefficient

Invictus Energy  Calfrac Well

Significant diversification

The 3 months correlation between Invictus and Calfrac is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Invictus Energy Limited and Calfrac Well Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calfrac Well Services and Invictus 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 Invictus Energy Limited are associated (or correlated) with Calfrac Well. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calfrac Well Services has no effect on the direction of Invictus Energy i.e., Invictus Energy and Calfrac Well go up and down completely randomly.

Pair Corralation between Invictus Energy and Calfrac Well

Assuming the 90 days horizon Invictus Energy Limited is expected to generate 5.46 times more return on investment than Calfrac Well. However, Invictus Energy is 5.46 times more volatile than Calfrac Well Services. It trades about 0.04 of its potential returns per unit of risk. Calfrac Well Services is currently generating about 0.05 per unit of risk. If you would invest  4.25  in Invictus Energy Limited on December 28, 2024 and sell it today you would lose (0.12) from holding Invictus Energy Limited or give up 2.82% of portfolio value over 90 days.

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

Invictus Energy Limited  vs.  Calfrac Well Services

Invictus Energy

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Invictus Energy Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Invictus Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Calfrac Well Services

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Calfrac Well Services are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Calfrac Well is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Invictus Energy and Calfrac Well

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

The idea behind Invictus Energy Limited and Calfrac Well Services 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.