Correlation Between Pine Cliff and Frontera Energy
Can any of the company-specific risk be diversified away by investing in both Pine Cliff 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 Pine Cliff and Frontera 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 Frontera Energy Corp, you can compare the effects of market volatilities on Pine Cliff 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 Pine Cliff with a short position of Frontera Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pine Cliff and Frontera Energy.
Diversification Opportunities for Pine Cliff and Frontera Energy
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pine and Frontera is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Pine Cliff Energy 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 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 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 Pine Cliff i.e., Pine Cliff and Frontera Energy go up and down completely randomly.
Pair Corralation between Pine Cliff and Frontera Energy
Assuming the 90 days horizon Pine Cliff Energy is expected to generate 0.69 times more return on investment than Frontera Energy. However, Pine Cliff Energy is 1.44 times less risky than Frontera Energy. It trades about -0.26 of its potential returns per unit of risk. Frontera Energy Corp is currently generating about -0.28 per unit of risk. If you would invest 65.00 in Pine Cliff Energy on November 3, 2024 and sell it today you would lose (5.00) from holding Pine Cliff Energy or give up 7.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Pine Cliff Energy vs. Frontera Energy Corp
Performance |
| Timeline |
| Pine Cliff Energy |
| Frontera Energy Corp |
Pine Cliff and Frontera Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pine Cliff and Frontera Energy
The main advantage of trading using opposite Pine Cliff and Frontera Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pine Cliff 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.| Pine Cliff vs. Athabasca Oil Corp | Pine Cliff vs. Cardinal Energy | Pine Cliff vs. Tamarack Valley Energy | Pine Cliff vs. Saturn Oil Gas |
| Frontera Energy vs. CGX Energy | Frontera Energy vs. Athabasca Oil Corp | Frontera Energy vs. Africa Oil Corp | Frontera Energy vs. MEG Energy 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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