Correlation Between ReoStar Energy and Daybreak Oil

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

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

Diversification Opportunities for ReoStar Energy and Daybreak Oil

-0.23

Correlation Coefficient

ReoStar Energy  Daybreak Oil

Very good diversification

The 3 months correlation between ReoStar and Daybreak is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding ReoStar Energy Corp and Daybreak Oil and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daybreak Oil and ReoStar Energy 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 ReoStar Energy Corp are associated (or correlated) with Daybreak Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daybreak Oil has no effect on the direction of ReoStar Energy i.e., ReoStar Energy and Daybreak Oil go up and down completely randomly.

Pair Corralation between ReoStar Energy and Daybreak Oil

Given the investment horizon of 90 days ReoStar Energy is expected to generate 1.56 times less return on investment than Daybreak Oil. But when comparing it to its historical volatility, ReoStar Energy Corp is 1.14 times less risky than Daybreak Oil. It trades about 0.04 of its potential returns per unit of risk. Daybreak Oil and is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Daybreak Oil and on July 12, 2025 and sell it today you would earn a total of  0.00  from holding Daybreak Oil and or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

ReoStar Energy Corp  vs.  Daybreak Oil and

ReoStar Energy Corp

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in ReoStar Energy Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, ReoStar Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Daybreak Oil

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Daybreak Oil and are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Daybreak Oil displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ReoStar Energy and Daybreak Oil

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

The idea behind ReoStar Energy Corp and Daybreak Oil and 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.