Correlation Between PACIFIC and Precision Drilling
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By analyzing existing cross correlation between PACIFIC GAS ELECTRIC and Precision Drilling, you can compare the effects of market volatilities on PACIFIC 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 PACIFIC with a short position of Precision Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of PACIFIC and Precision Drilling.
Diversification Opportunities for PACIFIC and Precision Drilling
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between PACIFIC and Precision is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding PACIFIC GAS ELECTRIC and Precision Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precision Drilling and PACIFIC 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 PACIFIC GAS ELECTRIC 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 PACIFIC i.e., PACIFIC and Precision Drilling go up and down completely randomly.
Pair Corralation between PACIFIC and Precision Drilling
Assuming the 90 days trading horizon PACIFIC GAS ELECTRIC is expected to generate 0.16 times more return on investment than Precision Drilling. However, PACIFIC GAS ELECTRIC is 6.45 times less risky than Precision Drilling. It trades about 0.05 of its potential returns per unit of risk. Precision Drilling is currently generating about -0.38 per unit of risk. If you would invest 9,796 in PACIFIC GAS ELECTRIC on September 23, 2024 and sell it today you would earn a total of 29.00 from holding PACIFIC GAS ELECTRIC or generate 0.3% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
PACIFIC GAS ELECTRIC vs. Precision Drilling
Performance |
Timeline |
PACIFIC GAS ELECTRIC |
Precision Drilling |
PACIFIC and Precision Drilling Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with PACIFIC and Precision Drilling
The main advantage of trading using opposite PACIFIC and Precision Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PACIFIC 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.PACIFIC vs. Sanyo Special Steel | PACIFIC vs. Kaiser Aluminum | PACIFIC vs. Olympic Steel | PACIFIC vs. Tenaris SA ADR |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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