Correlation Between Headwater Exploration and Canacol Energy
Can any of the company-specific risk be diversified away by investing in both Headwater Exploration and Canacol 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 Headwater Exploration and Canacol Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Headwater Exploration and Canacol Energy, you can compare the effects of market volatilities on Headwater Exploration and Canacol 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 Headwater Exploration with a short position of Canacol Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Headwater Exploration and Canacol Energy.
Diversification Opportunities for Headwater Exploration and Canacol Energy
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Headwater and Canacol is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Headwater Exploration and Canacol Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canacol Energy and Headwater Exploration 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 Headwater Exploration are associated (or correlated) with Canacol Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canacol Energy has no effect on the direction of Headwater Exploration i.e., Headwater Exploration and Canacol Energy go up and down completely randomly.
Pair Corralation between Headwater Exploration and Canacol Energy
Assuming the 90 days trading horizon Headwater Exploration is expected to generate 2.09 times less return on investment than Canacol Energy. But when comparing it to its historical volatility, Headwater Exploration is 2.02 times less risky than Canacol Energy. It trades about 0.05 of its potential returns per unit of risk. Canacol Energy is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 360.00 in Canacol Energy on September 3, 2024 and sell it today you would earn a total of 26.00 from holding Canacol Energy or generate 7.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Headwater Exploration vs. Canacol Energy
Performance |
| Timeline |
| Headwater Exploration |
| Canacol Energy |
Headwater Exploration and Canacol Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Headwater Exploration and Canacol Energy
The main advantage of trading using opposite Headwater Exploration and Canacol Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Headwater Exploration position performs unexpectedly, Canacol 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 Canacol Energy will offset losses from the drop in Canacol Energy's long position.| Headwater Exploration vs. Tamarack Valley Energy | Headwater Exploration vs. Gear Energy | Headwater Exploration vs. Cardinal Energy | Headwater Exploration vs. NuVista Energy |
| Canacol Energy vs. Parex Resources | Canacol Energy vs. Gran Tierra Energy | Canacol Energy vs. Kelt Exploration | Canacol Energy vs. Advantage Oil Gas |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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