Correlation Between Birchcliff Energy and Whitecap Resources
Can any of the company-specific risk be diversified away by investing in both Birchcliff Energy and Whitecap Resources 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 Whitecap Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Birchcliff Energy and Whitecap Resources, you can compare the effects of market volatilities on Birchcliff Energy and Whitecap Resources 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 Whitecap Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Birchcliff Energy and Whitecap Resources.
Diversification Opportunities for Birchcliff Energy and Whitecap Resources
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Birchcliff and Whitecap is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Birchcliff Energy and Whitecap Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitecap Resources 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 Whitecap Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitecap Resources has no effect on the direction of Birchcliff Energy i.e., Birchcliff Energy and Whitecap Resources go up and down completely randomly.
Pair Corralation between Birchcliff Energy and Whitecap Resources
Assuming the 90 days trading horizon Birchcliff Energy is expected to generate 1.6 times less return on investment than Whitecap Resources. In addition to that, Birchcliff Energy is 1.43 times more volatile than Whitecap Resources. It trades about 0.03 of its total potential returns per unit of risk. Whitecap Resources is currently generating about 0.08 per unit of volatility. If you would invest 807.00 in Whitecap Resources on August 29, 2024 and sell it today you would earn a total of 210.00 from holding Whitecap Resources or generate 26.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Birchcliff Energy vs. Whitecap Resources
Performance |
| Timeline |
| Birchcliff Energy |
| Whitecap Resources |
Birchcliff Energy and Whitecap Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Birchcliff Energy and Whitecap Resources
The main advantage of trading using opposite Birchcliff Energy and Whitecap Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Birchcliff Energy position performs unexpectedly, Whitecap Resources 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 Whitecap Resources will offset losses from the drop in Whitecap Resources' long position.| Birchcliff Energy vs. Tourmaline Oil Corp | Birchcliff Energy vs. ARC Resources | Birchcliff Energy vs. NuVista Energy | Birchcliff Energy vs. Whitecap Resources |
| Whitecap Resources vs. ARC Resources | Whitecap Resources vs. Tourmaline Oil Corp | Whitecap Resources vs. MEG Energy Corp | Whitecap Resources vs. Baytex Energy 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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