Correlation Between Cardinal Energy and Frontera Energy
Can any of the company-specific risk be diversified away by investing in both Cardinal Energy and Frontera 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 Cardinal Energy and Frontera Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Energy and Frontera Energy Corp, you can compare the effects of market volatilities on Cardinal Energy and Frontera 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 Cardinal Energy with a short position of Frontera Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Energy and Frontera Energy.
Diversification Opportunities for Cardinal Energy and Frontera Energy
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cardinal and Frontera is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Energy and Frontera Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontera Energy Corp and Cardinal Energy 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 Cardinal Energy are associated (or correlated) with Frontera Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontera Energy Corp has no effect on the direction of Cardinal Energy i.e., Cardinal Energy and Frontera Energy go up and down completely randomly.
Pair Corralation between Cardinal Energy and Frontera Energy
Assuming the 90 days horizon Cardinal Energy is expected to generate 0.66 times more return on investment than Frontera Energy. However, Cardinal Energy is 1.51 times less risky than Frontera Energy. It trades about 0.04 of its potential returns per unit of risk. Frontera Energy Corp is currently generating about 0.02 per unit of risk. If you would invest 426.00 in Cardinal Energy on August 31, 2024 and sell it today you would earn a total of 48.00 from holding Cardinal Energy or generate 11.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cardinal Energy vs. Frontera Energy Corp
Performance |
| Timeline |
| Cardinal Energy |
| Frontera Energy Corp |
Cardinal Energy and Frontera Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Energy and Frontera Energy
The main advantage of trading using opposite Cardinal Energy and Frontera Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Energy position performs unexpectedly, Frontera 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 Frontera Energy will offset losses from the drop in Frontera Energy's long position.| Cardinal Energy vs. Tamarack Valley Energy | Cardinal Energy vs. Pine Cliff Energy | Cardinal Energy vs. MEG Energy Corp | Cardinal Energy vs. Headwater Exploration |
| Frontera Energy vs. Petroleo Brasileiro Petrobras | Frontera Energy vs. Equinor ASA ADR | Frontera Energy vs. Eni SpA ADR | Frontera Energy vs. YPF Sociedad Anonima |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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