Correlation Between Canadian Natural and Must Capital
Can any of the company-specific risk be diversified away by investing in both Canadian Natural and Must Capital 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 Canadian Natural and Must Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Natural Resources and Must Capital, you can compare the effects of market volatilities on Canadian Natural and Must Capital 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 Canadian Natural with a short position of Must Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Natural and Must Capital.
Diversification Opportunities for Canadian Natural and Must Capital
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Canadian and Must is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Natural Resources and Must Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Must Capital and Canadian Natural 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 Canadian Natural Resources are associated (or correlated) with Must Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Must Capital has no effect on the direction of Canadian Natural i.e., Canadian Natural and Must Capital go up and down completely randomly.
Pair Corralation between Canadian Natural and Must Capital
Assuming the 90 days trading horizon Canadian Natural Resources is expected to generate 0.44 times more return on investment than Must Capital. However, Canadian Natural Resources is 2.27 times less risky than Must Capital. It trades about 0.05 of its potential returns per unit of risk. Must Capital is currently generating about -0.04 per unit of risk. If you would invest 3,445 in Canadian Natural Resources on August 27, 2024 and sell it today you would earn a total of 1,426 from holding Canadian Natural Resources or generate 41.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Natural Resources vs. Must Capital
Performance |
| Timeline |
| Canadian Natural Res |
| Must Capital |
Canadian Natural and Must Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Natural and Must Capital
The main advantage of trading using opposite Canadian Natural and Must Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Natural position performs unexpectedly, Must Capital 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 Must Capital will offset losses from the drop in Must Capital's long position.| Canadian Natural vs. InPlay Oil Corp | Canadian Natural vs. Yangarra Resources | Canadian Natural vs. iShares Canadian HYBrid | Canadian Natural vs. Altagas Cum Red |
| Must Capital vs. Lion One Metals | Must Capital vs. Cogeco Communications | Must Capital vs. Arbor Metals Corp | Must Capital vs. Ramp Metals |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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