Correlation Between Peyto ExplorationDevel and Great Atlantic

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

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

Diversification Opportunities for Peyto ExplorationDevel and Great Atlantic

-0.58

Correlation Coefficient

Peyto ExplorationDevel  Great Atlantic

Excellent diversification

The 3 months correlation between Peyto and Great is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Peyto ExplorationDevelopment C and Great Atlantic Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Atlantic Resources and Peyto ExplorationDevel 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 Peyto ExplorationDevelopment Corp are associated (or correlated) with Great Atlantic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Atlantic Resources has no effect on the direction of Peyto ExplorationDevel i.e., Peyto ExplorationDevel and Great Atlantic go up and down completely randomly.

Pair Corralation between Peyto ExplorationDevel and Great Atlantic

Assuming the 90 days trading horizon Peyto ExplorationDevelopment Corp is expected to generate 0.18 times more return on investment than Great Atlantic. However, Peyto ExplorationDevelopment Corp is 5.44 times less risky than Great Atlantic. It trades about -0.26 of its potential returns per unit of risk. Great Atlantic Resources is currently generating about -0.06 per unit of risk. If you would invest  1,690  in Peyto ExplorationDevelopment Corp on September 24, 2024 and sell it today you would lose (126.00) from holding Peyto ExplorationDevelopment Corp or give up 7.46% of portfolio value over 90 days.

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

Peyto ExplorationDevelopment C  vs.  Great Atlantic Resources

Peyto ExplorationDevel

Risk-Adjusted Performance

6 of 100

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. In spite of very abnormal basic indicators, Peyto ExplorationDevel may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Great Atlantic Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Peyto ExplorationDevel and Great Atlantic

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

The idea behind Peyto ExplorationDevelopment Corp and Great Atlantic Resources 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.