Correlation Between Cardinal Energy and Gear Energy
Can any of the company-specific risk be diversified away by investing in both Cardinal Energy and Gear 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 Cardinal Energy and Gear Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Energy and Gear Energy, you can compare the effects of market volatilities on Cardinal Energy and Gear 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 Cardinal Energy with a short position of Gear Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Energy and Gear Energy.
Diversification Opportunities for Cardinal Energy and Gear Energy
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cardinal and Gear is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Energy and Gear Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gear Energy and Cardinal 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 Cardinal Energy are associated (or correlated) with Gear Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gear Energy has no effect on the direction of Cardinal Energy i.e., Cardinal Energy and Gear Energy go up and down completely randomly.
Pair Corralation between Cardinal Energy and Gear Energy
Assuming the 90 days horizon Cardinal Energy is expected to generate 0.61 times more return on investment than Gear Energy. However, Cardinal Energy is 1.65 times less risky than Gear Energy. It trades about 0.03 of its potential returns per unit of risk. Gear Energy is currently generating about -0.04 per unit of risk. If you would invest 584.00 in Cardinal Energy on August 29, 2024 and sell it today you would earn a total of 81.00 from holding Cardinal Energy or generate 13.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cardinal Energy vs. Gear Energy
Performance |
| Timeline |
| Cardinal Energy |
| Gear Energy |
Cardinal Energy and Gear Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Energy and Gear Energy
The main advantage of trading using opposite Cardinal Energy and Gear Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Energy position performs unexpectedly, Gear 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 Gear Energy will offset losses from the drop in Gear Energy's long position.| Cardinal Energy vs. Tamarack Valley Energy | Cardinal Energy vs. Gear Energy | Cardinal Energy vs. Whitecap Resources | Cardinal Energy vs. Athabasca Oil Corp |
| Gear Energy vs. Yangarra Resources | Gear Energy vs. iShares Canadian HYBrid | Gear Energy vs. Altagas Cum Red | Gear Energy vs. European Residential Real |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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