Correlation Between Canacol Energy and Gear Energy
Can any of the company-specific risk be diversified away by investing in both Canacol 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 Canacol 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 Canacol Energy and Gear Energy, you can compare the effects of market volatilities on Canacol 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 Canacol Energy with a short position of Gear Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canacol Energy and Gear Energy.
Diversification Opportunities for Canacol Energy and Gear Energy
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Canacol and Gear is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Canacol Energy and Gear Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gear Energy 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 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 Canacol Energy i.e., Canacol Energy and Gear Energy go up and down completely randomly.
Pair Corralation between Canacol Energy and Gear Energy
Assuming the 90 days horizon Canacol Energy is expected to generate 5.71 times more return on investment than Gear Energy. However, Canacol Energy is 5.71 times more volatile than Gear Energy. It trades about 0.03 of its potential returns per unit of risk. Gear Energy is currently generating about -0.02 per unit of risk. If you would invest 634.00 in Canacol Energy on August 28, 2024 and sell it today you would lose (357.00) from holding Canacol Energy or give up 56.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.98% |
| Values | Daily Returns |
Canacol Energy vs. Gear Energy
Performance |
| Timeline |
| Canacol Energy |
| Gear Energy |
Canacol Energy and Gear Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canacol Energy and Gear Energy
The main advantage of trading using opposite Canacol Energy and Gear Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canacol 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.| Canacol Energy vs. Petroleo Brasileiro Petrobras | Canacol Energy vs. Equinor ASA ADR | Canacol Energy vs. Eni SpA ADR | Canacol Energy vs. YPF Sociedad Anonima |
| Gear Energy vs. Tamarack Valley Energy | Gear Energy vs. MEG Energy Corp | Gear Energy vs. Cardinal Energy | Gear Energy vs. Whitecap Resources |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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