Correlation Between BPI Energy and True North
Can any of the company-specific risk be diversified away by investing in both BPI Energy and True North 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 BPI Energy and True North into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BPI Energy Holdings and True North Energy, you can compare the effects of market volatilities on BPI Energy and True North 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 BPI Energy with a short position of True North. Check out your portfolio center. Please also check ongoing floating volatility patterns of BPI Energy and True North.
Diversification Opportunities for BPI Energy and True North
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between BPI and True is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding BPI Energy Holdings and True North Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on True North Energy and BPI 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 BPI Energy Holdings are associated (or correlated) with True North. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of True North Energy has no effect on the direction of BPI Energy i.e., BPI Energy and True North go up and down completely randomly.
Pair Corralation between BPI Energy and True North
If you would invest 0.01 in True North Energy on September 13, 2024 and sell it today you would earn a total of 0.00 from holding True North Energy or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 1.59% |
| Values | Daily Returns |
BPI Energy Holdings vs. True North Energy
Performance |
| Timeline |
| BPI Energy Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| True North Energy |
BPI Energy and True North Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BPI Energy and True North
The main advantage of trading using opposite BPI Energy and True North positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BPI Energy position performs unexpectedly, True North 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 True North will offset losses from the drop in True North's long position.The idea behind BPI Energy Holdings and True North Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| True North vs. Strat Petroleum | True North vs. Imperial Res | True North vs. Century Petroleum Corp | True North vs. Barrel 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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