Correlation Between Vista Oil and Trio Petroleum

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

By analyzing existing cross correlation between Vista Oil Gas and Trio Petroleum Corp, you can compare the effects of market volatilities on Vista Oil and Trio Petroleum 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 Vista Oil with a short position of Trio Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vista Oil and Trio Petroleum.

Diversification Opportunities for Vista Oil and Trio Petroleum

0.46

Correlation Coefficient

Vista Oil  Trio Petroleum

Very weak diversification

The 3 months correlation between Vista and Trio is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Vista Oil Gas and Trio Petroleum Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trio Petroleum Corp and Vista Oil 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 Vista Oil Gas are associated (or correlated) with Trio Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trio Petroleum Corp has no effect on the direction of Vista Oil i.e., Vista Oil and Trio Petroleum go up and down completely randomly.

Pair Corralation between Vista Oil and Trio Petroleum

Given the investment horizon of 90 days Vista Oil Gas is expected to under-perform the Trio Petroleum. But the stock apears to be less risky and, when comparing its historical volatility, Vista Oil Gas is 3.99 times less risky than Trio Petroleum. The stock trades about -0.05 of its potential returns per unit of risk. The Trio Petroleum Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  101.00  in Trio Petroleum Corp on December 27, 2024 and sell it today you would earn a total of  47.00  from holding Trio Petroleum Corp or generate 46.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Vista Oil Gas  vs.  Trio Petroleum Corp

Vista Oil Gas

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vista Oil Gas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Trio Petroleum Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Trio Petroleum Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Trio Petroleum unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vista Oil and Trio Petroleum

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

The idea behind Vista Oil Gas and Trio Petroleum Corp 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.