Correlation Between Stampede Drilling and MBN

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

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

Diversification Opportunities for Stampede Drilling and MBN

0.0

Correlation Coefficient

Stampede Drilling  MBN

Pay attention - limited upside

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

Pair Corralation between Stampede Drilling and MBN

If you would invest (100.00) in MBN Corporation on September 22, 2024 and sell it today you would earn a total of  100.00  from holding MBN Corporation 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

Stampede Drilling  vs.  MBN Corp.

Stampede Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stampede Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

MBN Corporation

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Stampede Drilling and MBN

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

The idea behind Stampede Drilling and MBN Corporation 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..