Correlation Between Canadian Natural and Lekoil
Can any of the company-specific risk be diversified away by investing in both Canadian Natural and Lekoil 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 Lekoil 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 Lekoil Limited, you can compare the effects of market volatilities on Canadian Natural and Lekoil 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 Lekoil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Natural and Lekoil.
Diversification Opportunities for Canadian Natural and Lekoil
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Canadian and Lekoil is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Natural Resources and Lekoil Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lekoil Limited 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 Lekoil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lekoil Limited has no effect on the direction of Canadian Natural i.e., Canadian Natural and Lekoil go up and down completely randomly.
Pair Corralation between Canadian Natural and Lekoil
Assuming the 90 days horizon Canadian Natural is expected to generate 6.14 times less return on investment than Lekoil. But when comparing it to its historical volatility, Canadian Natural Resources is 4.65 times less risky than Lekoil. It trades about 0.05 of its potential returns per unit of risk. Lekoil Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 0.40 in Lekoil Limited on August 30, 2024 and sell it today you would earn a total of 0.65 from holding Lekoil Limited or generate 162.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Natural Resources vs. Lekoil Limited
Performance |
| Timeline |
| Canadian Natural Res |
| Lekoil Limited |
Canadian Natural and Lekoil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Natural and Lekoil
The main advantage of trading using opposite Canadian Natural and Lekoil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Natural position performs unexpectedly, Lekoil 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 Lekoil will offset losses from the drop in Lekoil's long position.| Canadian Natural vs. Alibaba Group Holding | Canadian Natural vs. WOODSIDE ENE SPADR | Canadian Natural vs. Woodside Energy Group |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |