Correlation Between InPlay Oil and Advantage Oil

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

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

Diversification Opportunities for InPlay Oil and Advantage Oil

0.85

Correlation Coefficient

InPlay Oil  Advantage Oil

Very poor diversification

The 3 months correlation between InPlay and Advantage is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp 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 InPlay 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 InPlay Oil Corp 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 InPlay Oil i.e., InPlay Oil and Advantage Oil go up and down completely randomly.

Pair Corralation between InPlay Oil and Advantage Oil

Assuming the 90 days trading horizon InPlay Oil Corp is expected to generate 1.39 times more return on investment than Advantage Oil. However, InPlay Oil is 1.39 times more volatile than Advantage Oil Gas. It trades about 0.21 of its potential returns per unit of risk. Advantage Oil Gas is currently generating about 0.06 per unit of risk. If you would invest  726.00  in InPlay Oil Corp on April 24, 2025 and sell it today you would earn a total of  312.00  from holding InPlay Oil Corp or generate 42.98% return on investment over 90 days.

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

InPlay Oil Corp  vs.  Advantage Oil Gas

InPlay Oil Corp

Risk-Adjusted Performance

Solid

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

Advantage Oil Gas

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Advantage Oil Gas are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Advantage Oil may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with InPlay Oil and Advantage Oil

The main advantage of trading using opposite InPlay Oil and Advantage Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InPlay Oil 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 InPlay Oil Corp 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.