Correlation Between Obsidian Energy and Canadian Natural
Can any of the company-specific risk be diversified away by investing in both Obsidian Energy 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 Obsidian Energy and Canadian Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Obsidian Energy and Canadian Natural Resources, you can compare the effects of market volatilities on Obsidian Energy 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 Obsidian Energy with a short position of Canadian Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Obsidian Energy and Canadian Natural.
Diversification Opportunities for Obsidian Energy and Canadian Natural
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Obsidian and Canadian is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Obsidian Energy 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 Obsidian 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 Obsidian Energy 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 Obsidian Energy i.e., Obsidian Energy and Canadian Natural go up and down completely randomly.
Pair Corralation between Obsidian Energy and Canadian Natural
Considering the 90-day investment horizon Obsidian Energy is expected to under-perform the Canadian Natural. But the stock apears to be less risky and, when comparing its historical volatility, Obsidian Energy is 1.03 times less risky than Canadian Natural. The stock trades about -0.4 of its potential returns per unit of risk. The Canadian Natural Resources is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 3,136 in Canadian Natural Resources on November 2, 2024 and sell it today you would lose (41.00) from holding Canadian Natural Resources or give up 1.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Obsidian Energy vs. Canadian Natural Resources
Performance |
| Timeline |
| Obsidian Energy |
| Canadian Natural Res |
Obsidian Energy and Canadian Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Obsidian Energy and Canadian Natural
The main advantage of trading using opposite Obsidian Energy and Canadian Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Obsidian Energy 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.| Obsidian Energy vs. PEDEVCO Corp | Obsidian Energy vs. Houston American Energy | Obsidian Energy vs. PHX Minerals | Obsidian Energy vs. Trio Petroleum Corp |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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