Correlation Between New Source and Daybreak Oil

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

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

Diversification Opportunities for New Source and Daybreak Oil

0.0

Correlation Coefficient

New Source  Daybreak Oil

Pay attention - limited upside

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

Pair Corralation between New Source and Daybreak Oil

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

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

New Source Energy  vs.  Daybreak Oil and

New Source Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days New Source Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, New Source is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Daybreak Oil

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Daybreak Oil and are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Daybreak Oil displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with New Source and Daybreak Oil

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

The idea behind New Source Energy and Daybreak Oil and 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.