Correlation Between Canadian Natural and Westport Fuel
Can any of the company-specific risk be diversified away by investing in both Canadian Natural and Westport Fuel 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 Westport Fuel 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 Westport Fuel Systems, you can compare the effects of market volatilities on Canadian Natural and Westport Fuel 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 Westport Fuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Natural and Westport Fuel.
Diversification Opportunities for Canadian Natural and Westport Fuel
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Canadian and Westport is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Natural Resources and Westport Fuel Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westport Fuel Systems 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 Westport Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westport Fuel Systems has no effect on the direction of Canadian Natural i.e., Canadian Natural and Westport Fuel go up and down completely randomly.
Pair Corralation between Canadian Natural and Westport Fuel
Assuming the 90 days trading horizon Canadian Natural Resources is expected to under-perform the Westport Fuel. But the stock apears to be less risky and, when comparing its historical volatility, Canadian Natural Resources is 1.53 times less risky than Westport Fuel. The stock trades about -0.13 of its potential returns per unit of risk. The Westport Fuel Systems is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 558.00 in Westport Fuel Systems on September 12, 2024 and sell it today you would earn a total of 51.00 from holding Westport Fuel Systems or generate 9.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Canadian Natural Resources vs. Westport Fuel Systems
Performance |
| Timeline |
| Canadian Natural Res |
| Westport Fuel Systems |
Canadian Natural and Westport Fuel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Natural and Westport Fuel
The main advantage of trading using opposite Canadian Natural and Westport Fuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Natural position performs unexpectedly, Westport Fuel 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 Westport Fuel will offset losses from the drop in Westport Fuel's long position.| Canadian Natural vs. Suncor Energy | Canadian Natural vs. Cenovus Energy | Canadian Natural vs. TC Energy Corp | Canadian Natural vs. Enbridge |
| Westport Fuel vs. Ballard Power Systems | Westport Fuel vs. NFI Group | Westport Fuel vs. GreenPower Motor | Westport Fuel vs. Real Matters |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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