Correlation Between Camber Energy and Obsidian Energy
Can any of the company-specific risk be diversified away by investing in both Camber Energy and Obsidian 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 Camber Energy and Obsidian Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Camber Energy and Obsidian Energy, you can compare the effects of market volatilities on Camber Energy and Obsidian 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 Camber Energy with a short position of Obsidian Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Camber Energy and Obsidian Energy.
Diversification Opportunities for Camber Energy and Obsidian Energy
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Camber and Obsidian is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Camber Energy and Obsidian Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Obsidian Energy and Camber 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 Camber Energy are associated (or correlated) with Obsidian Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Obsidian Energy has no effect on the direction of Camber Energy i.e., Camber Energy and Obsidian Energy go up and down completely randomly.
Pair Corralation between Camber Energy and Obsidian Energy
Considering the 90-day investment horizon Camber Energy is expected to under-perform the Obsidian Energy. In addition to that, Camber Energy is 2.47 times more volatile than Obsidian Energy. It trades about -0.28 of its total potential returns per unit of risk. Obsidian Energy is currently generating about -0.12 per unit of volatility. If you would invest 600.00 in Obsidian Energy on September 4, 2024 and sell it today you would lose (40.00) from holding Obsidian Energy or give up 6.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Camber Energy vs. Obsidian Energy
Performance |
| Timeline |
| Camber Energy |
| Obsidian Energy |
Camber Energy and Obsidian Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Camber Energy and Obsidian Energy
The main advantage of trading using opposite Camber Energy and Obsidian Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Camber Energy position performs unexpectedly, Obsidian 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 Obsidian Energy will offset losses from the drop in Obsidian Energy's long position.The idea behind Camber Energy and Obsidian 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.| Obsidian Energy vs. Baytex Energy Corp | Obsidian Energy vs. Vermilion Energy | Obsidian Energy vs. Canadian Natural Resources | Obsidian Energy vs. Ovintiv |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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