Correlation Between ConocoPhillips and Canadian Natural
Can any of the company-specific risk be diversified away by investing in both ConocoPhillips and Canadian Natural 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 ConocoPhillips and Canadian Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ConocoPhillips and Canadian Natural Resources, you can compare the effects of market volatilities on ConocoPhillips and Canadian Natural 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 ConocoPhillips with a short position of Canadian Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of ConocoPhillips and Canadian Natural.
Diversification Opportunities for ConocoPhillips and Canadian Natural
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ConocoPhillips and Canadian is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding ConocoPhillips and Canadian Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Natural Res and ConocoPhillips 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 ConocoPhillips are associated (or correlated) with Canadian Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Natural Res has no effect on the direction of ConocoPhillips i.e., ConocoPhillips and Canadian Natural go up and down completely randomly.
Pair Corralation between ConocoPhillips and Canadian Natural
Considering the 90-day investment horizon ConocoPhillips is expected to generate 1.5 times more return on investment than Canadian Natural. However, ConocoPhillips is 1.5 times more volatile than Canadian Natural Resources. It trades about 0.13 of its potential returns per unit of risk. Canadian Natural Resources is currently generating about -0.08 per unit of risk. If you would invest 10,161 in ConocoPhillips on August 30, 2024 and sell it today you would earn a total of 578.00 from holding ConocoPhillips or generate 5.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ConocoPhillips vs. Canadian Natural Resources
Performance |
| Timeline |
| ConocoPhillips |
| Canadian Natural Res |
ConocoPhillips and Canadian Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ConocoPhillips and Canadian Natural
The main advantage of trading using opposite ConocoPhillips and Canadian Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ConocoPhillips position performs unexpectedly, Canadian Natural 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 Canadian Natural will offset losses from the drop in Canadian Natural's long position.| ConocoPhillips vs. Diamondback Energy | ConocoPhillips vs. APA Corporation | ConocoPhillips vs. Hess Corporation | ConocoPhillips vs. Coterra Energy |
| Canadian Natural vs. Devon Energy | Canadian Natural vs. ConocoPhillips | Canadian Natural vs. Diamondback Energy | Canadian Natural vs. Occidental Petroleum |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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