Correlation Between Westshore Terminals and InPlay Oil

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

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

Diversification Opportunities for Westshore Terminals and InPlay Oil

0.37

Correlation Coefficient

Westshore Terminals  InPlay Oil

Weak diversification

The 3 months correlation between Westshore and InPlay is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Westshore Terminals Investment and InPlay Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InPlay Oil Corp and Westshore Terminals 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 Westshore Terminals Investment are associated (or correlated) with InPlay Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InPlay Oil Corp has no effect on the direction of Westshore Terminals i.e., Westshore Terminals and InPlay Oil go up and down completely randomly.

Pair Corralation between Westshore Terminals and InPlay Oil

Assuming the 90 days trading horizon Westshore Terminals Investment is expected to generate 0.48 times more return on investment than InPlay Oil. However, Westshore Terminals Investment is 2.06 times less risky than InPlay Oil. It trades about 0.04 of its potential returns per unit of risk. InPlay Oil Corp is currently generating about -0.07 per unit of risk. If you would invest  2,304  in Westshore Terminals Investment on October 26, 2024 and sell it today you would earn a total of  52.00  from holding Westshore Terminals Investment or generate 2.26% return on investment over 90 days.

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

Westshore Terminals Investment  vs.  InPlay Oil Corp

Westshore Terminals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Westshore Terminals Investment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Westshore Terminals is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

InPlay Oil Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days InPlay Oil Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Westshore Terminals and InPlay Oil

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

The idea behind Westshore Terminals Investment and InPlay Oil 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.