Correlation Between ARC Resources and Tamarack Valley
Can any of the company-specific risk be diversified away by investing in both ARC Resources and Tamarack Valley 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 ARC Resources and Tamarack Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARC Resources and Tamarack Valley Energy, you can compare the effects of market volatilities on ARC Resources and Tamarack Valley 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 ARC Resources with a short position of Tamarack Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARC Resources and Tamarack Valley.
Diversification Opportunities for ARC Resources and Tamarack Valley
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ARC and Tamarack is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding ARC Resources and Tamarack Valley Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tamarack Valley Energy and ARC Resources 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 ARC Resources are associated (or correlated) with Tamarack Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tamarack Valley Energy has no effect on the direction of ARC Resources i.e., ARC Resources and Tamarack Valley go up and down completely randomly.
Pair Corralation between ARC Resources and Tamarack Valley
Assuming the 90 days trading horizon ARC Resources is expected to generate 0.81 times more return on investment than Tamarack Valley. However, ARC Resources is 1.24 times less risky than Tamarack Valley. It trades about 0.07 of its potential returns per unit of risk. Tamarack Valley Energy is currently generating about 0.02 per unit of risk. If you would invest 1,547 in ARC Resources on August 31, 2024 and sell it today you would earn a total of 1,034 from holding ARC Resources or generate 66.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARC Resources vs. Tamarack Valley Energy
Performance |
| Timeline |
| ARC Resources |
| Tamarack Valley Energy |
ARC Resources and Tamarack Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARC Resources and Tamarack Valley
The main advantage of trading using opposite ARC Resources and Tamarack Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARC Resources position performs unexpectedly, Tamarack Valley 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 Tamarack Valley will offset losses from the drop in Tamarack Valley's long position.| ARC Resources vs. Tourmaline Oil Corp | ARC Resources vs. Whitecap Resources | ARC Resources vs. MEG Energy Corp | ARC Resources vs. Vermilion Energy |
| Tamarack Valley vs. MEG Energy Corp | Tamarack Valley vs. Cardinal Energy | Tamarack Valley vs. Athabasca Oil Corp | Tamarack Valley vs. Whitecap Resources |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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