Correlation Between Pine Cliff and Birchcliff Energy
Can any of the company-specific risk be diversified away by investing in both Pine Cliff and Birchcliff 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 Pine Cliff and Birchcliff Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pine Cliff Energy and Birchcliff Energy, you can compare the effects of market volatilities on Pine Cliff and Birchcliff 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 Pine Cliff with a short position of Birchcliff Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pine Cliff and Birchcliff Energy.
Diversification Opportunities for Pine Cliff and Birchcliff Energy
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pine and Birchcliff is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Pine Cliff Energy and Birchcliff Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Birchcliff Energy and Pine Cliff 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 Pine Cliff Energy are associated (or correlated) with Birchcliff Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Birchcliff Energy has no effect on the direction of Pine Cliff i.e., Pine Cliff and Birchcliff Energy go up and down completely randomly.
Pair Corralation between Pine Cliff and Birchcliff Energy
Assuming the 90 days horizon Pine Cliff Energy is expected to under-perform the Birchcliff Energy. In addition to that, Pine Cliff is 1.18 times more volatile than Birchcliff Energy. It trades about -0.01 of its total potential returns per unit of risk. Birchcliff Energy is currently generating about 0.0 per unit of volatility. If you would invest 400.00 in Birchcliff Energy on September 1, 2024 and sell it today you would lose (22.00) from holding Birchcliff Energy or give up 5.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pine Cliff Energy vs. Birchcliff Energy
Performance |
| Timeline |
| Pine Cliff Energy |
| Birchcliff Energy |
Pine Cliff and Birchcliff Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pine Cliff and Birchcliff Energy
The main advantage of trading using opposite Pine Cliff and Birchcliff Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pine Cliff position performs unexpectedly, Birchcliff 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 Birchcliff Energy will offset losses from the drop in Birchcliff Energy's long position.| Pine Cliff vs. Athabasca Oil Corp | Pine Cliff vs. Cardinal Energy | Pine Cliff vs. Tamarack Valley Energy | Pine Cliff vs. Saturn Oil Gas |
| Birchcliff Energy vs. Tamarack Valley Energy | Birchcliff Energy vs. Peyto ExplorationDevelopment Corp | Birchcliff Energy vs. Gear Energy | Birchcliff Energy vs. Spartan Delta Corp |
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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