Correlation Between Birchcliff Energy and Surge Energy
Can any of the company-specific risk be diversified away by investing in both Birchcliff Energy and Surge 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 Birchcliff Energy and Surge Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Birchcliff Energy and Surge Energy, you can compare the effects of market volatilities on Birchcliff Energy and Surge 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 Birchcliff Energy with a short position of Surge Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Birchcliff Energy and Surge Energy.
Diversification Opportunities for Birchcliff Energy and Surge Energy
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Birchcliff and Surge is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Birchcliff Energy and Surge Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surge Energy 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 Surge Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surge Energy has no effect on the direction of Birchcliff Energy i.e., Birchcliff Energy and Surge Energy go up and down completely randomly.
Pair Corralation between Birchcliff Energy and Surge Energy
Assuming the 90 days trading horizon Birchcliff Energy is expected to generate 1.15 times more return on investment than Surge Energy. However, Birchcliff Energy is 1.15 times more volatile than Surge Energy. It trades about 0.08 of its potential returns per unit of risk. Surge Energy is currently generating about -0.01 per unit of risk. If you would invest 511.00 in Birchcliff Energy on September 2, 2024 and sell it today you would earn a total of 18.00 from holding Birchcliff Energy or generate 3.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Birchcliff Energy vs. Surge Energy
Performance |
| Timeline |
| Birchcliff Energy |
| Surge Energy |
Birchcliff Energy and Surge Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Birchcliff Energy and Surge Energy
The main advantage of trading using opposite Birchcliff Energy and Surge Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Birchcliff Energy position performs unexpectedly, Surge 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 Surge Energy will offset losses from the drop in Surge Energy's long position.| Birchcliff Energy vs. Tourmaline Oil Corp | Birchcliff Energy vs. ARC Resources | Birchcliff Energy vs. NuVista Energy | Birchcliff Energy vs. Whitecap Resources |
| Surge Energy vs. Whitecap Resources | Surge Energy vs. Cardinal Energy | Surge Energy vs. Athabasca Oil Corp | Surge Energy vs. Tamarack Valley 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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