Correlation Between Birchcliff Energy and Advantage Oil
Can any of the company-specific risk be diversified away by investing in both Birchcliff Energy 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 Birchcliff Energy and Advantage Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Birchcliff Energy and Advantage Oil Gas, you can compare the effects of market volatilities on Birchcliff Energy 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 Birchcliff Energy with a short position of Advantage Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Birchcliff Energy and Advantage Oil.
Diversification Opportunities for Birchcliff Energy and Advantage Oil
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Birchcliff and Advantage is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Birchcliff Energy 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 Birchcliff 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 Birchcliff Energy 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 Birchcliff Energy i.e., Birchcliff Energy and Advantage Oil go up and down completely randomly.
Pair Corralation between Birchcliff Energy and Advantage Oil
Assuming the 90 days trading horizon Birchcliff Energy is expected to generate 1.49 times less return on investment than Advantage Oil. But when comparing it to its historical volatility, Birchcliff Energy is 1.12 times less risky than Advantage Oil. It trades about 0.04 of its potential returns per unit of risk. Advantage Oil Gas is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 918.00 in Advantage Oil Gas on August 25, 2024 and sell it today you would earn a total of 19.00 from holding Advantage Oil Gas or generate 2.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Birchcliff Energy vs. Advantage Oil Gas
Performance |
| Timeline |
| Birchcliff Energy |
| Advantage Oil Gas |
Birchcliff Energy and Advantage Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Birchcliff Energy and Advantage Oil
The main advantage of trading using opposite Birchcliff Energy and Advantage Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Birchcliff Energy 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.| Birchcliff Energy vs. Trican Well Service | Birchcliff Energy vs. Ensign Energy Services | Birchcliff Energy vs. Calfrac Well Services |
| Advantage Oil vs. Birchcliff Energy | Advantage Oil vs. NuVista Energy | Advantage Oil vs. Kelt Exploration | Advantage Oil vs. Peyto ExplorationDevelopment 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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