Correlation Between Surge Energy and Birchcliff Energy
Can any of the company-specific risk be diversified away by investing in both Surge Energy and Birchcliff 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 Surge Energy and Birchcliff Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Surge Energy and Birchcliff Energy, you can compare the effects of market volatilities on Surge Energy and Birchcliff 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 Surge Energy with a short position of Birchcliff Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Surge Energy and Birchcliff Energy.
Diversification Opportunities for Surge Energy and Birchcliff Energy
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Surge and Birchcliff is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Surge Energy and Birchcliff Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Birchcliff Energy and Surge Energy 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 Surge Energy are associated (or correlated) with Birchcliff Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Birchcliff Energy has no effect on the direction of Surge Energy i.e., Surge Energy and Birchcliff Energy go up and down completely randomly.
Pair Corralation between Surge Energy and Birchcliff Energy
Assuming the 90 days trading horizon Surge Energy is expected to under-perform the Birchcliff Energy. But the stock apears to be less risky and, when comparing its historical volatility, Surge Energy is 1.11 times less risky than Birchcliff Energy. The stock trades about -0.07 of its potential returns per unit of risk. The Birchcliff Energy is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 529.00 in Birchcliff Energy on August 30, 2024 and sell it today you would lose (8.00) from holding Birchcliff Energy or give up 1.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Surge Energy vs. Birchcliff Energy
Performance |
| Timeline |
| Surge Energy |
| Birchcliff Energy |
Surge Energy and Birchcliff Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Surge Energy and Birchcliff Energy
The main advantage of trading using opposite Surge Energy and Birchcliff Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Surge Energy position performs unexpectedly, Birchcliff 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 Birchcliff Energy will offset losses from the drop in Birchcliff Energy's long position.| Surge Energy vs. CGX Energy | Surge Energy vs. Africa Oil Corp | Surge Energy vs. Africa Energy Corp | Surge Energy vs. Hemisphere Energy |
| Birchcliff Energy vs. Tourmaline Oil Corp | Birchcliff Energy vs. ARC Resources | Birchcliff Energy vs. NuVista Energy | Birchcliff 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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