Correlation Between Alphabet and Advantage Oil

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

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

Diversification Opportunities for Alphabet and Advantage Oil

0.72

Correlation Coefficient

Alphabet  Advantage Oil

Poor diversification

The 3 months correlation between Alphabet and Advantage is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc CDR and Advantage Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantage Oil Gas and Alphabet 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 Alphabet Inc CDR are associated (or correlated) with Advantage Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantage Oil Gas has no effect on the direction of Alphabet i.e., Alphabet and Advantage Oil go up and down completely randomly.

Pair Corralation between Alphabet and Advantage Oil

Assuming the 90 days trading horizon Alphabet Inc CDR is expected to generate 0.86 times more return on investment than Advantage Oil. However, Alphabet Inc CDR is 1.17 times less risky than Advantage Oil. It trades about 0.2 of its potential returns per unit of risk. Advantage Oil Gas is currently generating about 0.12 per unit of risk. If you would invest  2,469  in Alphabet Inc CDR on April 20, 2025 and sell it today you would earn a total of  575.00  from holding Alphabet Inc CDR or generate 23.29% return on investment over 90 days.

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

Alphabet Inc CDR  vs.  Advantage Oil Gas

Alphabet CDR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc CDR are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Alphabet exhibited solid returns over the last few months and may actually be approaching a breakup point.

Advantage Oil Gas

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Advantage Oil Gas are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Advantage Oil displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alphabet and Advantage Oil

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

The idea behind Alphabet Inc CDR and Advantage Oil Gas 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.