Correlation Between DelphX Capital and Tourmaline Oil

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

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

Diversification Opportunities for DelphX Capital and Tourmaline Oil

-0.34

Correlation Coefficient

DelphX Capital  Tourmaline Oil

Very good diversification

The 3 months correlation between DelphX and Tourmaline is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding DelphX Capital Markets and Tourmaline Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tourmaline Oil Corp and DelphX Capital 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 DelphX Capital Markets are associated (or correlated) with Tourmaline Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tourmaline Oil Corp has no effect on the direction of DelphX Capital i.e., DelphX Capital and Tourmaline Oil go up and down completely randomly.

Pair Corralation between DelphX Capital and Tourmaline Oil

Assuming the 90 days trading horizon DelphX Capital Markets is expected to generate 4.95 times more return on investment than Tourmaline Oil. However, DelphX Capital is 4.95 times more volatile than Tourmaline Oil Corp. It trades about 0.01 of its potential returns per unit of risk. Tourmaline Oil Corp is currently generating about 0.03 per unit of risk. If you would invest  13.00  in DelphX Capital Markets on September 28, 2024 and sell it today you would lose (2.00) from holding DelphX Capital Markets or give up 15.38% of portfolio value over 90 days.

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

DelphX Capital Markets  vs.  Tourmaline Oil Corp

DelphX Capital Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DelphX Capital Markets has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable essential indicators, DelphX Capital is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Tourmaline Oil Corp

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tourmaline Oil Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Tourmaline Oil is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with DelphX Capital and Tourmaline Oil

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

The idea behind DelphX Capital Markets and Tourmaline 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.