Correlation Between Canadian Natural and Diamondback Energy
Can any of the company-specific risk be diversified away by investing in both Canadian Natural and Diamondback 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 Canadian Natural and Diamondback Energy 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 Diamondback Energy, you can compare the effects of market volatilities on Canadian Natural and Diamondback 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 Canadian Natural with a short position of Diamondback Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Natural and Diamondback Energy.
Diversification Opportunities for Canadian Natural and Diamondback Energy
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Canadian and Diamondback is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Natural Resources and Diamondback Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamondback Energy 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 Diamondback Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamondback Energy has no effect on the direction of Canadian Natural i.e., Canadian Natural and Diamondback Energy go up and down completely randomly.
Pair Corralation between Canadian Natural and Diamondback Energy
Considering the 90-day investment horizon Canadian Natural Resources is expected to under-perform the Diamondback Energy. But the stock apears to be less risky and, when comparing its historical volatility, Canadian Natural Resources is 1.42 times less risky than Diamondback Energy. The stock trades about -0.05 of its potential returns per unit of risk. The Diamondback Energy is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 18,023 in Diamondback Energy on August 24, 2024 and sell it today you would earn a total of 247.00 from holding Diamondback Energy or generate 1.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Natural Resources vs. Diamondback Energy
Performance |
| Timeline |
| Canadian Natural Res |
| Diamondback Energy |
Canadian Natural and Diamondback Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Natural and Diamondback Energy
The main advantage of trading using opposite Canadian Natural and Diamondback Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Natural position performs unexpectedly, Diamondback 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 Diamondback Energy will offset losses from the drop in Diamondback Energy's long position.| Canadian Natural vs. Houston American Energy | Canadian Natural vs. Mexco Energy | Canadian Natural vs. Ring Energy | Canadian Natural vs. Permianville Royalty Trust |
| Diamondback Energy vs. Devon Energy | Diamondback Energy vs. Coterra Energy | Diamondback Energy vs. EOG Resources | Diamondback Energy vs. ConocoPhillips |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |