Correlation Between Canacol Energy and First National
Can any of the company-specific risk be diversified away by investing in both Canacol Energy and First National 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 Canacol Energy and First National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canacol Energy and First National Financial, you can compare the effects of market volatilities on Canacol Energy and First National 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 Canacol Energy with a short position of First National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canacol Energy and First National.
Diversification Opportunities for Canacol Energy and First National
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Canacol and First is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Canacol Energy and First National Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National Financial and Canacol 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 Canacol Energy are associated (or correlated) with First National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National Financial has no effect on the direction of Canacol Energy i.e., Canacol Energy and First National go up and down completely randomly.
Pair Corralation between Canacol Energy and First National
Assuming the 90 days trading horizon Canacol Energy is expected to under-perform the First National. In addition to that, Canacol Energy is 3.17 times more volatile than First National Financial. It trades about -0.04 of its total potential returns per unit of risk. First National Financial is currently generating about 0.07 per unit of volatility. If you would invest 1,067 in First National Financial on August 30, 2024 and sell it today you would earn a total of 381.00 from holding First National Financial or generate 35.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canacol Energy vs. First National Financial
Performance |
| Timeline |
| Canacol Energy |
| First National Financial |
Canacol Energy and First National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canacol Energy and First National
The main advantage of trading using opposite Canacol Energy and First National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canacol Energy position performs unexpectedly, First National 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 First National will offset losses from the drop in First National's long position.| Canacol Energy vs. Parex Resources | Canacol Energy vs. Gran Tierra Energy | Canacol Energy vs. Kelt Exploration | Canacol Energy vs. Advantage Oil Gas |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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