Correlation Between Canadian Natural and Stampede Drilling
Can any of the company-specific risk be diversified away by investing in both Canadian Natural and Stampede Drilling 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 Stampede Drilling 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 Stampede Drilling, you can compare the effects of market volatilities on Canadian Natural and Stampede Drilling 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 Stampede Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Natural and Stampede Drilling.
Diversification Opportunities for Canadian Natural and Stampede Drilling
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Canadian and Stampede is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Natural Resources and Stampede Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stampede Drilling 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 Stampede Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stampede Drilling has no effect on the direction of Canadian Natural i.e., Canadian Natural and Stampede Drilling go up and down completely randomly.
Pair Corralation between Canadian Natural and Stampede Drilling
Assuming the 90 days trading horizon Canadian Natural Resources is expected to generate 0.47 times more return on investment than Stampede Drilling. However, Canadian Natural Resources is 2.12 times less risky than Stampede Drilling. It trades about 0.03 of its potential returns per unit of risk. Stampede Drilling is currently generating about -0.02 per unit of risk. If you would invest 4,352 in Canadian Natural Resources on September 1, 2024 and sell it today you would earn a total of 400.00 from holding Canadian Natural Resources or generate 9.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Natural Resources vs. Stampede Drilling
Performance |
| Timeline |
| Canadian Natural Res |
| Stampede Drilling |
Canadian Natural and Stampede Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Natural and Stampede Drilling
The main advantage of trading using opposite Canadian Natural and Stampede Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Natural position performs unexpectedly, Stampede Drilling 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 Stampede Drilling will offset losses from the drop in Stampede Drilling's long position.| Canadian Natural vs. Suncor Energy | Canadian Natural vs. Cenovus Energy | Canadian Natural vs. TC Energy Corp | Canadian Natural vs. Enbridge |
| Stampede Drilling vs. STEP Energy Services | Stampede Drilling vs. Southern Energy Corp | Stampede Drilling vs. PHX Energy Services |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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