Correlation Between Daybreak Oil and FEC Resources

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

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

Diversification Opportunities for Daybreak Oil and FEC Resources

0.0

Correlation Coefficient

Daybreak Oil  FEC Resources

Pay attention - limited upside

The 3 months correlation between Daybreak and FEC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Daybreak Oil and and FEC Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FEC Resources and Daybreak 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 Daybreak Oil and are associated (or correlated) with FEC Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FEC Resources has no effect on the direction of Daybreak Oil i.e., Daybreak Oil and FEC Resources go up and down completely randomly.

Pair Corralation between Daybreak Oil and FEC Resources

If you would invest  0.19  in FEC Resources on April 30, 2025 and sell it today you would earn a total of  0.01  from holding FEC Resources or generate 5.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Daybreak Oil and  vs.  FEC Resources

Daybreak Oil

Risk-Adjusted Performance

Very Weak

Over the last 90 days Daybreak Oil and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Daybreak Oil is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

FEC Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FEC Resources are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, FEC Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Daybreak Oil and FEC Resources

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

The idea behind Daybreak Oil and and FEC 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.