Correlation Between Eco (Atlantic) and Frontera Energy
Can any of the company-specific risk be diversified away by investing in both Eco (Atlantic) 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 Eco (Atlantic) and Frontera Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eco Oil Gas and Frontera Energy Corp, you can compare the effects of market volatilities on Eco (Atlantic) 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 Eco (Atlantic) with a short position of Frontera Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eco (Atlantic) and Frontera Energy.
Diversification Opportunities for Eco (Atlantic) and Frontera Energy
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Eco and Frontera is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Eco Oil Gas 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 Eco (Atlantic) 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 Eco Oil Gas 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 Eco (Atlantic) i.e., Eco (Atlantic) and Frontera Energy go up and down completely randomly.
Pair Corralation between Eco (Atlantic) and Frontera Energy
Assuming the 90 days horizon Eco Oil Gas is expected to generate 3.14 times more return on investment than Frontera Energy. However, Eco (Atlantic) is 3.14 times more volatile than Frontera Energy Corp. It trades about 0.02 of its potential returns per unit of risk. Frontera Energy Corp is currently generating about -0.01 per unit of risk. If you would invest 24.00 in Eco Oil Gas on August 30, 2024 and sell it today you would lose (12.00) from holding Eco Oil Gas or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eco Oil Gas vs. Frontera Energy Corp
Performance |
| Timeline |
| Eco (Atlantic) |
| Frontera Energy Corp |
Eco (Atlantic) and Frontera Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eco (Atlantic) and Frontera Energy
The main advantage of trading using opposite Eco (Atlantic) and Frontera Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eco (Atlantic) 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.| Eco (Atlantic) vs. CGX Energy | Eco (Atlantic) vs. Frontera Energy Corp | Eco (Atlantic) vs. Africa Energy Corp | Eco (Atlantic) vs. Africa Oil Corp |
| Frontera Energy vs. CGX Energy | Frontera Energy vs. Athabasca Oil Corp | Frontera Energy vs. Africa Oil Corp | Frontera Energy vs. MEG Energy Corp |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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