Correlation Between Cardinal Energy and Kelt Exploration
Can any of the company-specific risk be diversified away by investing in both Cardinal Energy and Kelt Exploration 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 Kelt Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Energy and Kelt Exploration, you can compare the effects of market volatilities on Cardinal Energy and Kelt Exploration 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 Kelt Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Energy and Kelt Exploration.
Diversification Opportunities for Cardinal Energy and Kelt Exploration
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cardinal and Kelt is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Energy and Kelt Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kelt Exploration 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 Kelt Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kelt Exploration has no effect on the direction of Cardinal Energy i.e., Cardinal Energy and Kelt Exploration go up and down completely randomly.
Pair Corralation between Cardinal Energy and Kelt Exploration
Assuming the 90 days horizon Cardinal Energy is expected to generate 3.34 times less return on investment than Kelt Exploration. But when comparing it to its historical volatility, Cardinal Energy is 1.34 times less risky than Kelt Exploration. It trades about 0.01 of its potential returns per unit of risk. Kelt Exploration is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 390.00 in Kelt Exploration on August 26, 2024 and sell it today you would earn a total of 123.00 from holding Kelt Exploration or generate 31.54% 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. Kelt Exploration
Performance |
| Timeline |
| Cardinal Energy |
| Kelt Exploration |
Cardinal Energy and Kelt Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Energy and Kelt Exploration
The main advantage of trading using opposite Cardinal Energy and Kelt Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Energy position performs unexpectedly, Kelt Exploration 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 Kelt Exploration will offset losses from the drop in Kelt Exploration's long position.| Cardinal Energy vs. Petroleo Brasileiro Petrobras | Cardinal Energy vs. Equinor ASA ADR | Cardinal Energy vs. Eni SpA ADR | Cardinal Energy vs. YPF Sociedad Anonima |
| Kelt Exploration vs. Petroleo Brasileiro Petrobras | Kelt Exploration vs. Equinor ASA ADR | Kelt Exploration vs. Eni SpA ADR | Kelt Exploration 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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