Correlation Between Topaz Energy and Park Lawn

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

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

Diversification Opportunities for Topaz Energy and Park Lawn

-0.12

Correlation Coefficient

Topaz Energy  Park Lawn

Good diversification

The 3 months correlation between Topaz and Park is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Topaz Energy Corp and Park Lawn in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Lawn and Topaz 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 Topaz Energy Corp are associated (or correlated) with Park Lawn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Lawn has no effect on the direction of Topaz Energy i.e., Topaz Energy and Park Lawn go up and down completely randomly.

Pair Corralation between Topaz Energy and Park Lawn

If you would invest  1,844  in Topaz Energy Corp on October 27, 2024 and sell it today you would earn a total of  22.00  from holding Topaz Energy Corp or generate 1.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.26%
Values	Daily Returns

Topaz Energy Corp  vs.  Park Lawn

Topaz Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Topaz Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Topaz Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Park Lawn

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Park Lawn has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Park Lawn is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Topaz Energy and Park Lawn

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

The idea behind Topaz Energy Corp and Park Lawn 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.