Correlation Between PotlatchDeltic Corp and Imperial Oil

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Can any of the company-specific risk be diversified away by investing in both PotlatchDeltic Corp and Imperial 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 PotlatchDeltic Corp and Imperial Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PotlatchDeltic Corp and Imperial Oil, you can compare the effects of market volatilities on PotlatchDeltic Corp and Imperial 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 PotlatchDeltic Corp with a short position of Imperial Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of PotlatchDeltic Corp and Imperial Oil.

Diversification Opportunities for PotlatchDeltic Corp and Imperial Oil

-0.19
  Correlation Coefficient

Good diversification

The 3 months correlation between PotlatchDeltic and Imperial is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding PotlatchDeltic Corp and Imperial Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Oil and PotlatchDeltic Corp 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 PotlatchDeltic Corp are associated (or correlated) with Imperial Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Oil has no effect on the direction of PotlatchDeltic Corp i.e., PotlatchDeltic Corp and Imperial Oil go up and down completely randomly.

Pair Corralation between PotlatchDeltic Corp and Imperial Oil

Considering the 90-day investment horizon PotlatchDeltic Corp is expected to generate 2.29 times less return on investment than Imperial Oil. But when comparing it to its historical volatility, PotlatchDeltic Corp is 1.01 times less risky than Imperial Oil. It trades about 0.04 of its potential returns per unit of risk. Imperial Oil is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  5,958  in Imperial Oil on December 29, 2023 and sell it today you would earn a total of  907.00  from holding Imperial Oil or generate 15.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

PotlatchDeltic Corp  vs.  Imperial Oil

 Performance 
       Timeline  
PotlatchDeltic Corp 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days PotlatchDeltic Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, PotlatchDeltic Corp is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.
Imperial Oil 

Risk-Adjusted Performance

16 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Imperial Oil are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent primary indicators, Imperial Oil displayed solid returns over the last few months and may actually be approaching a breakup point.

PotlatchDeltic Corp and Imperial Oil Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PotlatchDeltic Corp and Imperial Oil

The main advantage of trading using opposite PotlatchDeltic Corp and Imperial Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PotlatchDeltic Corp position performs unexpectedly, Imperial 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 Imperial Oil will offset losses from the drop in Imperial Oil's long position.
The idea behind PotlatchDeltic Corp and Imperial Oil 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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