Correlation Between Valeura Energy and Peyto ExplorationDevel

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

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

Diversification Opportunities for Valeura Energy and Peyto ExplorationDevel

0.48

Correlation Coefficient

Valeura Energy  Peyto ExplorationDevel

Very weak diversification

The 3 months correlation between Valeura and Peyto is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Valeura Energy and Peyto ExplorationDevelopment C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peyto ExplorationDevel and Valeura 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 Valeura Energy are associated (or correlated) with Peyto ExplorationDevel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peyto ExplorationDevel has no effect on the direction of Valeura Energy i.e., Valeura Energy and Peyto ExplorationDevel go up and down completely randomly.

Pair Corralation between Valeura Energy and Peyto ExplorationDevel

Assuming the 90 days horizon Valeura Energy is expected to generate 1.77 times more return on investment than Peyto ExplorationDevel. However, Valeura Energy is 1.77 times more volatile than Peyto ExplorationDevelopment Corp. It trades about 0.12 of its potential returns per unit of risk. Peyto ExplorationDevelopment Corp is currently generating about 0.08 per unit of risk. If you would invest  476.00  in Valeura Energy on December 29, 2024 and sell it today you would earn a total of  108.00  from holding Valeura Energy or generate 22.69% return on investment over 90 days.

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

Valeura Energy  vs.  Peyto ExplorationDevelopment C

Valeura Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Valeura Energy are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Valeura Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Peyto ExplorationDevel

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Peyto ExplorationDevelopment Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Peyto ExplorationDevel may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Valeura Energy and Peyto ExplorationDevel

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

The idea behind Valeura Energy and Peyto ExplorationDevelopment 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.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.