Correlation Between Birchcliff Energy and Precision Drilling
Can any of the company-specific risk be diversified away by investing in both Birchcliff Energy and Precision Drilling 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 Precision Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Birchcliff Energy and Precision Drilling, you can compare the effects of market volatilities on Birchcliff Energy and Precision Drilling 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 Precision Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Birchcliff Energy and Precision Drilling.
Diversification Opportunities for Birchcliff Energy and Precision Drilling
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Birchcliff and Precision is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Birchcliff Energy and Precision Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precision Drilling 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 Precision Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precision Drilling has no effect on the direction of Birchcliff Energy i.e., Birchcliff Energy and Precision Drilling go up and down completely randomly.
Pair Corralation between Birchcliff Energy and Precision Drilling
Assuming the 90 days trading horizon Birchcliff Energy is expected to under-perform the Precision Drilling. But the stock apears to be less risky and, when comparing its historical volatility, Birchcliff Energy is 1.08 times less risky than Precision Drilling. The stock trades about -0.03 of its potential returns per unit of risk. The Precision Drilling is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 9,754 in Precision Drilling on August 30, 2024 and sell it today you would lose (993.00) from holding Precision Drilling or give up 10.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Birchcliff Energy vs. Precision Drilling
Performance |
| Timeline |
| Birchcliff Energy |
| Precision Drilling |
Birchcliff Energy and Precision Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Birchcliff Energy and Precision Drilling
The main advantage of trading using opposite Birchcliff Energy and Precision Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Birchcliff Energy position performs unexpectedly, Precision Drilling 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 Precision Drilling will offset losses from the drop in Precision Drilling's long position.| Birchcliff Energy vs. Tourmaline Oil Corp | Birchcliff Energy vs. ARC Resources | Birchcliff Energy vs. NuVista Energy | Birchcliff Energy vs. Whitecap Resources |
| Precision Drilling vs. Trican Well Service | Precision Drilling vs. Ensign Energy Services | Precision Drilling vs. Calfrac Well Services | Precision Drilling vs. Birchcliff Energy |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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