Correlation Between Pine Cliff and MEG Energy
Can any of the company-specific risk be diversified away by investing in both Pine Cliff and MEG 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 MEG 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 MEG Energy Corp, you can compare the effects of market volatilities on Pine Cliff and MEG 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 MEG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pine Cliff and MEG Energy.
Diversification Opportunities for Pine Cliff and MEG Energy
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pine and MEG is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Pine Cliff Energy and MEG Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEG 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 MEG Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEG Energy Corp has no effect on the direction of Pine Cliff i.e., Pine Cliff and MEG Energy go up and down completely randomly.
Pair Corralation between Pine Cliff and MEG Energy
Assuming the 90 days horizon Pine Cliff Energy is expected to generate 1.32 times more return on investment than MEG Energy. However, Pine Cliff is 1.32 times more volatile than MEG Energy Corp. It trades about -0.01 of its potential returns per unit of risk. MEG Energy Corp is currently generating about -0.03 per unit of risk. If you would invest 70.00 in Pine Cliff Energy on September 1, 2024 and sell it today you would lose (7.00) from holding Pine Cliff Energy or give up 10.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.47% |
| Values | Daily Returns |
Pine Cliff Energy vs. MEG Energy Corp
Performance |
| Timeline |
| Pine Cliff Energy |
| MEG Energy Corp |
Pine Cliff and MEG Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pine Cliff and MEG Energy
The main advantage of trading using opposite Pine Cliff and MEG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pine Cliff position performs unexpectedly, MEG 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 MEG Energy will offset losses from the drop in MEG 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 |
| MEG Energy vs. Gear Energy | MEG Energy vs. Tamarack Valley Energy | MEG Energy vs. Cardinal Energy | MEG Energy vs. Whitecap Resources |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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