Correlation Between Pine Cliff and Canadian Natural
Can any of the company-specific risk be diversified away by investing in both Pine Cliff 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 Pine Cliff and Canadian Natural 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 Canadian Natural Resources, you can compare the effects of market volatilities on Pine Cliff 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 Pine Cliff with a short position of Canadian Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pine Cliff and Canadian Natural.
Diversification Opportunities for Pine Cliff and Canadian Natural
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pine and Canadian is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Pine Cliff 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 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 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 Pine Cliff i.e., Pine Cliff and Canadian Natural go up and down completely randomly.
Pair Corralation between Pine Cliff and Canadian Natural
Assuming the 90 days trading horizon Pine Cliff Energy is expected to generate 2.23 times more return on investment than Canadian Natural. However, Pine Cliff is 2.23 times more volatile than Canadian Natural Resources. It trades about 0.27 of its potential returns per unit of risk. Canadian Natural Resources is currently generating about 0.17 per unit of risk. If you would invest 83.00 in Pine Cliff Energy on October 22, 2024 and sell it today you would earn a total of 13.00 from holding Pine Cliff Energy or generate 15.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pine Cliff Energy vs. Canadian Natural Resources
Performance |
| Timeline |
| Pine Cliff Energy |
| Canadian Natural Res |
Pine Cliff and Canadian Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pine Cliff and Canadian Natural
The main advantage of trading using opposite Pine Cliff and Canadian Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pine Cliff 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.| Pine Cliff vs. Gear Energy | Pine Cliff vs. Headwater Exploration | Pine Cliff vs. Cardinal Energy | Pine Cliff vs. Journey Energy |
| Canadian Natural vs. Suncor Energy | Canadian Natural vs. Cenovus Energy | Canadian Natural vs. TC Energy Corp | Canadian Natural vs. Enbridge |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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