Correlation Between Advantage Oil and State Street

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

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

Diversification Opportunities for Advantage Oil and State Street

-0.64

Correlation Coefficient

Advantage Oil  State Street

Excellent diversification

The 3 months correlation between Advantage and State is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Advantage Oil Gas and State Street Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Target and Advantage 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 Advantage Oil Gas are associated (or correlated) with State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Target has no effect on the direction of Advantage Oil i.e., Advantage Oil and State Street go up and down completely randomly.

Pair Corralation between Advantage Oil and State Street

If you would invest  603.00  in Advantage Oil Gas on January 25, 2024 and sell it today you would earn a total of  0.00  from holding Advantage Oil Gas or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	4.55%
Values	Daily Returns

Advantage Oil Gas  vs.  State Street Target

Advantage Oil Gas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advantage Oil Gas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Advantage Oil is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

State Street Target

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in State Street Target are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, State Street is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Advantage Oil and State Street

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

The idea behind Advantage Oil Gas and State Street Target 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.