Correlation Between Melbana Energy and Whitecap Resources
Can any of the company-specific risk be diversified away by investing in both Melbana Energy and Whitecap Resources 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 Melbana Energy and Whitecap Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melbana Energy Limited and Whitecap Resources, you can compare the effects of market volatilities on Melbana Energy and Whitecap Resources 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 Melbana Energy with a short position of Whitecap Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melbana Energy and Whitecap Resources.
Diversification Opportunities for Melbana Energy and Whitecap Resources
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Melbana and Whitecap is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Melbana Energy Limited and Whitecap Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitecap Resources and Melbana 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 Melbana Energy Limited are associated (or correlated) with Whitecap Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitecap Resources has no effect on the direction of Melbana Energy i.e., Melbana Energy and Whitecap Resources go up and down completely randomly.
Pair Corralation between Melbana Energy and Whitecap Resources
Assuming the 90 days horizon Melbana Energy Limited is expected to generate 25.24 times more return on investment than Whitecap Resources. However, Melbana Energy is 25.24 times more volatile than Whitecap Resources. It trades about 0.05 of its potential returns per unit of risk. Whitecap Resources is currently generating about 0.03 per unit of risk. If you would invest 2.80 in Melbana Energy Limited on August 29, 2024 and sell it today you would lose (0.80) from holding Melbana Energy Limited or give up 28.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melbana Energy Limited vs. Whitecap Resources
Performance |
| Timeline |
| Melbana Energy |
| Whitecap Resources |
Melbana Energy and Whitecap Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melbana Energy and Whitecap Resources
The main advantage of trading using opposite Melbana Energy and Whitecap Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melbana Energy position performs unexpectedly, Whitecap Resources 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 Whitecap Resources will offset losses from the drop in Whitecap Resources' long position.| Melbana Energy vs. Permian Resources | Melbana Energy vs. Devon Energy | Melbana Energy vs. EOG Resources | Melbana Energy vs. Coterra Energy |
| Whitecap Resources vs. Athabasca Oil Corp | Whitecap Resources vs. Headwater Exploration | Whitecap Resources vs. Tamarack Valley Energy | Whitecap Resources vs. Birchcliff Energy |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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