Correlation Between Frontera Energy and Cardinal Energy
Can any of the company-specific risk be diversified away by investing in both Frontera Energy and Cardinal 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 Frontera Energy and Cardinal Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frontera Energy Corp and Cardinal Energy, you can compare the effects of market volatilities on Frontera Energy and Cardinal 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 Frontera Energy with a short position of Cardinal Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontera Energy and Cardinal Energy.
Diversification Opportunities for Frontera Energy and Cardinal Energy
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Frontera and Cardinal is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Frontera Energy Corp and Cardinal Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Energy and Frontera 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 Frontera Energy Corp are associated (or correlated) with Cardinal Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Energy has no effect on the direction of Frontera Energy i.e., Frontera Energy and Cardinal Energy go up and down completely randomly.
Pair Corralation between Frontera Energy and Cardinal Energy
Assuming the 90 days horizon Frontera Energy is expected to generate 1.42 times less return on investment than Cardinal Energy. In addition to that, Frontera Energy is 1.51 times more volatile than Cardinal Energy. It trades about 0.02 of its total potential returns per unit of risk. Cardinal Energy is currently generating about 0.04 per unit of volatility. 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 |
Frontera Energy Corp vs. Cardinal Energy
Performance |
| Timeline |
| Frontera Energy Corp |
| Cardinal Energy |
Frontera Energy and Cardinal Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frontera Energy and Cardinal Energy
The main advantage of trading using opposite Frontera Energy and Cardinal Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontera Energy position performs unexpectedly, Cardinal 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 Cardinal Energy will offset losses from the drop in Cardinal Energy's long position.| Frontera Energy vs. Petroleo Brasileiro Petrobras | Frontera Energy vs. Equinor ASA ADR | Frontera Energy vs. Eni SpA ADR | Frontera Energy vs. YPF Sociedad Anonima |
| Cardinal Energy vs. Tamarack Valley Energy | Cardinal Energy vs. Pine Cliff Energy | Cardinal Energy vs. MEG Energy Corp | Cardinal Energy vs. Headwater Exploration |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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