Correlation Between Mosaic and Precision Drilling

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

By analyzing existing cross correlation between The Mosaic and Precision Drilling, you can compare the effects of market volatilities on Mosaic and Precision Drilling 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 Mosaic with a short position of Precision Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mosaic and Precision Drilling.

Diversification Opportunities for Mosaic and Precision Drilling

0.31

Correlation Coefficient

Mosaic  Precision Drilling

Weak diversification

The 3 months correlation between Mosaic and Precision is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding The Mosaic and Precision Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precision Drilling and Mosaic 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 The Mosaic are associated (or correlated) with Precision Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precision Drilling has no effect on the direction of Mosaic i.e., Mosaic and Precision Drilling go up and down completely randomly.

Pair Corralation between Mosaic and Precision Drilling

Considering the 90-day investment horizon The Mosaic is expected to generate 1.1 times more return on investment than Precision Drilling. However, Mosaic is 1.1 times more volatile than Precision Drilling. It trades about 0.36 of its potential returns per unit of risk. Precision Drilling is currently generating about 0.2 per unit of risk. If you would invest  2,408  in The Mosaic on October 26, 2024 and sell it today you would earn a total of  372.00  from holding The Mosaic or generate 15.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

The Mosaic  vs.  Precision Drilling

Mosaic

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Mosaic are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Mosaic is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Precision Drilling

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Precision Drilling are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Precision Drilling may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Mosaic and Precision Drilling

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

The idea behind The Mosaic and Precision Drilling 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.