Correlation Between Canadian Natural and Civitas Resources
Can any of the company-specific risk be diversified away by investing in both Canadian Natural and Civitas Resources 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 Civitas Resources 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 Civitas Resources, you can compare the effects of market volatilities on Canadian Natural and Civitas Resources 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 Civitas Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Natural and Civitas Resources.
Diversification Opportunities for Canadian Natural and Civitas Resources
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Canadian and Civitas is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Natural Resources and Civitas Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Civitas Resources 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 Civitas Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Civitas Resources has no effect on the direction of Canadian Natural i.e., Canadian Natural and Civitas Resources go up and down completely randomly.
Pair Corralation between Canadian Natural and Civitas Resources
Considering the 90-day investment horizon Canadian Natural Resources is expected to generate 0.86 times more return on investment than Civitas Resources. However, Canadian Natural Resources is 1.16 times less risky than Civitas Resources. It trades about -0.02 of its potential returns per unit of risk. Civitas Resources is currently generating about -0.08 per unit of risk. If you would invest 3,441 in Canadian Natural Resources on August 31, 2024 and sell it today you would lose (89.00) from holding Canadian Natural Resources or give up 2.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Natural Resources vs. Civitas Resources
Performance |
| Timeline |
| Canadian Natural Res |
| Civitas Resources |
Canadian Natural and Civitas Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Natural and Civitas Resources
The main advantage of trading using opposite Canadian Natural and Civitas Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Natural position performs unexpectedly, Civitas Resources 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 Civitas Resources will offset losses from the drop in Civitas Resources' long position.| Canadian Natural vs. Baytex Energy Corp | Canadian Natural vs. Vermilion Energy | Canadian Natural vs. Obsidian Energy | Canadian Natural vs. Ovintiv |
| Civitas Resources vs. Magnolia Oil Gas | Civitas Resources vs. SM Energy Co | Civitas Resources vs. Range Resources Corp | Civitas Resources vs. Matador 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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