Correlation Between Cardinal Energy and Tamarack Valley
Can any of the company-specific risk be diversified away by investing in both Cardinal Energy and Tamarack Valley 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 Tamarack Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Energy and Tamarack Valley Energy, you can compare the effects of market volatilities on Cardinal Energy and Tamarack Valley 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 Tamarack Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Energy and Tamarack Valley.
Diversification Opportunities for Cardinal Energy and Tamarack Valley
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cardinal and Tamarack is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Energy and Tamarack Valley Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tamarack Valley Energy 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 Tamarack Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tamarack Valley Energy has no effect on the direction of Cardinal Energy i.e., Cardinal Energy and Tamarack Valley go up and down completely randomly.
Pair Corralation between Cardinal Energy and Tamarack Valley
Assuming the 90 days horizon Cardinal Energy is expected to generate 1.71 times less return on investment than Tamarack Valley. But when comparing it to its historical volatility, Cardinal Energy is 1.31 times less risky than Tamarack Valley. It trades about 0.01 of its potential returns per unit of risk. Tamarack Valley Energy is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 303.00 in Tamarack Valley Energy on August 29, 2024 and sell it today you would earn a total of 27.00 from holding Tamarack Valley Energy or generate 8.91% 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. Tamarack Valley Energy
Performance |
| Timeline |
| Cardinal Energy |
| Tamarack Valley Energy |
Cardinal Energy and Tamarack Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Energy and Tamarack Valley
The main advantage of trading using opposite Cardinal Energy and Tamarack Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Energy position performs unexpectedly, Tamarack Valley 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 Tamarack Valley will offset losses from the drop in Tamarack Valley'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 |
| Tamarack Valley vs. Zoom Video Communications | Tamarack Valley vs. Nike Inc | Tamarack Valley vs. The Gap, | Tamarack Valley vs. Tandy Leather Factory |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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