Correlation Between Sage Potash and Cardinal Energy
Can any of the company-specific risk be diversified away by investing in both Sage Potash and Cardinal 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 Sage Potash and Cardinal Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sage Potash Corp and Cardinal Energy, you can compare the effects of market volatilities on Sage Potash and Cardinal 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 Sage Potash with a short position of Cardinal Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sage Potash and Cardinal Energy.
Diversification Opportunities for Sage Potash and Cardinal Energy
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sage and Cardinal is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sage Potash Corp and Cardinal Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Energy and Sage Potash 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 Sage Potash Corp are associated (or correlated) with Cardinal Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Energy has no effect on the direction of Sage Potash i.e., Sage Potash and Cardinal Energy go up and down completely randomly.
Pair Corralation between Sage Potash and Cardinal Energy
Assuming the 90 days trading horizon Sage Potash is expected to generate 2.01 times less return on investment than Cardinal Energy. In addition to that, Sage Potash is 5.03 times more volatile than Cardinal Energy. It trades about 0.0 of its total potential returns per unit of risk. Cardinal Energy is currently generating about 0.03 per unit of volatility. If you would invest 585.00 in Cardinal Energy on August 28, 2024 and sell it today you would earn a total of 83.00 from holding Cardinal Energy or generate 14.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 89.08% |
| Values | Daily Returns |
Sage Potash Corp vs. Cardinal Energy
Performance |
| Timeline |
| Sage Potash Corp |
| Cardinal Energy |
Sage Potash and Cardinal Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sage Potash and Cardinal Energy
The main advantage of trading using opposite Sage Potash and Cardinal Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sage Potash position performs unexpectedly, Cardinal 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 Cardinal Energy will offset losses from the drop in Cardinal Energy's long position.| Sage Potash vs. Uniteds Limited | Sage Potash vs. E L Financial Corp | Sage Potash vs. Canadian General Investments | Sage Potash vs. Clairvest Group |
| Cardinal Energy vs. Tamarack Valley Energy | Cardinal Energy vs. Gear Energy | Cardinal Energy vs. Whitecap Resources | Cardinal Energy vs. Athabasca Oil 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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