Correlation Between Whitecap Resources and MEG Energy
Can any of the company-specific risk be diversified away by investing in both Whitecap Resources 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 Whitecap Resources and MEG Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Whitecap Resources and MEG Energy Corp, you can compare the effects of market volatilities on Whitecap Resources 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 Whitecap Resources with a short position of MEG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whitecap Resources and MEG Energy.
Diversification Opportunities for Whitecap Resources and MEG Energy
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Whitecap and MEG is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Whitecap Resources 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 Whitecap Resources 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 Whitecap Resources 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 Whitecap Resources i.e., Whitecap Resources and MEG Energy go up and down completely randomly.
Pair Corralation between Whitecap Resources and MEG Energy
Assuming the 90 days horizon Whitecap Resources is expected to generate 1.94 times less return on investment than MEG Energy. But when comparing it to its historical volatility, Whitecap Resources is 1.24 times less risky than MEG Energy. It trades about 0.03 of its potential returns per unit of risk. MEG Energy Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,262 in MEG Energy Corp on August 29, 2024 and sell it today you would earn a total of 498.00 from holding MEG Energy Corp or generate 39.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Whitecap Resources vs. MEG Energy Corp
Performance |
| Timeline |
| Whitecap Resources |
| MEG Energy Corp |
Whitecap Resources and MEG Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Whitecap Resources and MEG Energy
The main advantage of trading using opposite Whitecap Resources and MEG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whitecap Resources 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.| Whitecap Resources vs. Athabasca Oil Corp | Whitecap Resources vs. Headwater Exploration | Whitecap Resources vs. Tamarack Valley Energy | Whitecap Resources vs. Birchcliff Energy |
| 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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