Correlation Between Headwater Exploration and Frontera Energy
Can any of the company-specific risk be diversified away by investing in both Headwater Exploration 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 Headwater Exploration and Frontera 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 Frontera Energy Corp, you can compare the effects of market volatilities on Headwater Exploration 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 Headwater Exploration with a short position of Frontera Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Headwater Exploration and Frontera Energy.
Diversification Opportunities for Headwater Exploration and Frontera Energy
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Headwater and Frontera is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Headwater Exploration 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 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 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 Headwater Exploration i.e., Headwater Exploration and Frontera Energy go up and down completely randomly.
Pair Corralation between Headwater Exploration and Frontera Energy
Assuming the 90 days trading horizon Headwater Exploration is expected to generate 0.64 times more return on investment than Frontera Energy. However, Headwater Exploration is 1.57 times less risky than Frontera Energy. It trades about 0.04 of its potential returns per unit of risk. Frontera Energy Corp is currently generating about -0.02 per unit of risk. If you would invest 581.00 in Headwater Exploration on September 2, 2024 and sell it today you would earn a total of 107.00 from holding Headwater Exploration or generate 18.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Headwater Exploration vs. Frontera Energy Corp
Performance |
| Timeline |
| Headwater Exploration |
| Frontera Energy Corp |
Headwater Exploration and Frontera Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Headwater Exploration and Frontera Energy
The main advantage of trading using opposite Headwater Exploration and Frontera Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Headwater Exploration 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.| Headwater Exploration vs. Tamarack Valley Energy | Headwater Exploration vs. Gear Energy | Headwater Exploration vs. Cardinal Energy | Headwater Exploration vs. NuVista Energy |
| Frontera Energy vs. CGX Energy | Frontera Energy vs. Parex Resources | Frontera Energy vs. Gran Tierra Energy | Frontera Energy vs. Secure Energy Services |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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