Correlation Between Sage Potash and Canacol Energy
Can any of the company-specific risk be diversified away by investing in both Sage Potash and Canacol 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 Canacol 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 Canacol Energy, you can compare the effects of market volatilities on Sage Potash and Canacol 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 Canacol Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sage Potash and Canacol Energy.
Diversification Opportunities for Sage Potash and Canacol Energy
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sage and Canacol is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sage Potash Corp and Canacol Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canacol 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 Canacol Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canacol Energy has no effect on the direction of Sage Potash i.e., Sage Potash and Canacol Energy go up and down completely randomly.
Pair Corralation between Sage Potash and Canacol Energy
Assuming the 90 days trading horizon Sage Potash Corp is expected to generate 2.79 times more return on investment than Canacol Energy. However, Sage Potash is 2.79 times more volatile than Canacol Energy. It trades about 0.0 of its potential returns per unit of risk. Canacol Energy is currently generating about -0.04 per unit of risk. If you would invest 59.00 in Sage Potash Corp on August 30, 2024 and sell it today you would lose (41.00) from holding Sage Potash Corp or give up 69.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 86.03% |
| Values | Daily Returns |
Sage Potash Corp vs. Canacol Energy
Performance |
| Timeline |
| Sage Potash Corp |
| Canacol Energy |
Sage Potash and Canacol Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sage Potash and Canacol Energy
The main advantage of trading using opposite Sage Potash and Canacol Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sage Potash position performs unexpectedly, Canacol 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 Canacol Energy will offset losses from the drop in Canacol Energy's long position.| Sage Potash vs. Canadian Natural Resources | Sage Potash vs. Suncor Energy | Sage Potash vs. iShares Canadian HYBrid | Sage Potash vs. Altagas Cum Red |
| Canacol Energy vs. Parex Resources | Canacol Energy vs. Gran Tierra Energy | Canacol Energy vs. Kelt Exploration | Canacol Energy vs. Advantage Oil Gas |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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