Correlation Between Canadian Natural and US Energy
Can any of the company-specific risk be diversified away by investing in both Canadian Natural and US 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 US 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 US Energy Corp, you can compare the effects of market volatilities on Canadian Natural and US 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 US Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Natural and US Energy.
Diversification Opportunities for Canadian Natural and US Energy
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Canadian and USEG is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Natural Resources and US Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Energy Corp 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 US Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Energy Corp has no effect on the direction of Canadian Natural i.e., Canadian Natural and US Energy go up and down completely randomly.
Pair Corralation between Canadian Natural and US Energy
Considering the 90-day investment horizon Canadian Natural Resources is expected to under-perform the US Energy. But the stock apears to be less risky and, when comparing its historical volatility, Canadian Natural Resources is 3.26 times less risky than US Energy. The stock trades about -0.06 of its potential returns per unit of risk. The US Energy Corp is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 142.00 in US Energy Corp on September 4, 2024 and sell it today you would earn a total of 35.00 from holding US Energy Corp or generate 24.65% 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. US Energy Corp
Performance |
| Timeline |
| Canadian Natural Res |
| US Energy Corp |
Canadian Natural and US Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Natural and US Energy
The main advantage of trading using opposite Canadian Natural and US Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Natural position performs unexpectedly, US 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 US Energy will offset losses from the drop in US Energy's long position.| Canadian Natural vs. Baytex Energy Corp | Canadian Natural vs. Vermilion Energy | Canadian Natural vs. Obsidian Energy | Canadian Natural vs. Ovintiv |
| US Energy vs. Evolution Petroleum | US Energy vs. Ring Energy | US Energy vs. Gran Tierra Energy | US Energy vs. PEDEVCO Corp |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |