Correlation Between Headwater Exploration and Canadian Natural
Can any of the company-specific risk be diversified away by investing in both Headwater Exploration and Canadian Natural 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 Canadian Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Headwater Exploration and Canadian Natural Resources, you can compare the effects of market volatilities on Headwater Exploration and Canadian Natural 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 Canadian Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Headwater Exploration and Canadian Natural.
Diversification Opportunities for Headwater Exploration and Canadian Natural
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Headwater and Canadian is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Headwater Exploration and Canadian Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Natural Res 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 Canadian Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Natural Res has no effect on the direction of Headwater Exploration i.e., Headwater Exploration and Canadian Natural go up and down completely randomly.
Pair Corralation between Headwater Exploration and Canadian Natural
Assuming the 90 days trading horizon Headwater Exploration is expected to generate 1.19 times more return on investment than Canadian Natural. However, Headwater Exploration is 1.19 times more volatile than Canadian Natural Resources. It trades about 0.02 of its potential returns per unit of risk. Canadian Natural Resources is currently generating about 0.02 per unit of risk. If you would invest 686.00 in Headwater Exploration on September 1, 2024 and sell it today you would earn a total of 2.00 from holding Headwater Exploration or generate 0.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Headwater Exploration vs. Canadian Natural Resources
Performance |
| Timeline |
| Headwater Exploration |
| Canadian Natural Res |
Headwater Exploration and Canadian Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Headwater Exploration and Canadian Natural
The main advantage of trading using opposite Headwater Exploration and Canadian Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Headwater Exploration position performs unexpectedly, Canadian Natural 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 Canadian Natural will offset losses from the drop in Canadian Natural's long position.| Headwater Exploration vs. Tamarack Valley Energy | Headwater Exploration vs. Gear Energy | Headwater Exploration vs. Cardinal Energy | Headwater Exploration vs. NuVista Energy |
| Canadian Natural vs. Suncor Energy | Canadian Natural vs. Cenovus Energy | Canadian Natural vs. TC Energy Corp | Canadian Natural vs. Enbridge |
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.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |