Correlation Between Advantage Oil and Cardinal Energy
Can any of the company-specific risk be diversified away by investing in both Advantage Oil and Cardinal Energy 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 Advantage Oil and Cardinal Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advantage Oil Gas and Cardinal Energy, you can compare the effects of market volatilities on Advantage Oil and Cardinal Energy 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 Advantage Oil with a short position of Cardinal Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advantage Oil and Cardinal Energy.
Diversification Opportunities for Advantage Oil and Cardinal Energy
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Advantage and Cardinal is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Advantage Oil Gas and Cardinal Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Energy and Advantage 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 Advantage Oil Gas are associated (or correlated) with Cardinal Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Energy has no effect on the direction of Advantage Oil i.e., Advantage Oil and Cardinal Energy go up and down completely randomly.
Pair Corralation between Advantage Oil and Cardinal Energy
Assuming the 90 days trading horizon Advantage Oil is expected to generate 5.82 times less return on investment than Cardinal Energy. In addition to that, Advantage Oil is 2.46 times more volatile than Cardinal Energy. It trades about 0.01 of its total potential returns per unit of risk. Cardinal Energy is currently generating about 0.18 per unit of volatility. If you would invest 639.00 in Cardinal Energy on August 28, 2024 and sell it today you would earn a total of 26.00 from holding Cardinal Energy or generate 4.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advantage Oil Gas vs. Cardinal Energy
Performance |
| Timeline |
| Advantage Oil Gas |
| Cardinal Energy |
Advantage Oil and Cardinal Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advantage Oil and Cardinal Energy
The main advantage of trading using opposite Advantage Oil and Cardinal Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advantage Oil position performs unexpectedly, Cardinal Energy 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 Cardinal Energy will offset losses from the drop in Cardinal Energy's long position.| Advantage Oil vs. Birchcliff Energy | Advantage Oil vs. NuVista Energy | Advantage Oil vs. Kelt Exploration | Advantage Oil vs. Peyto ExplorationDevelopment Corp |
| Cardinal Energy vs. Tamarack Valley Energy | Cardinal Energy vs. Gear Energy | Cardinal Energy vs. Whitecap Resources | Cardinal Energy vs. Athabasca Oil Corp |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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