Correlation Between ATT and Canacol Energy
Can any of the company-specific risk be diversified away by investing in both ATT 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 ATT and Canacol Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and Canacol Energy, you can compare the effects of market volatilities on ATT 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 ATT with a short position of Canacol Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Canacol Energy.
Diversification Opportunities for ATT and Canacol Energy
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ATT and Canacol is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Canacol Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canacol Energy and ATT 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 ATT Inc 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 ATT i.e., ATT and Canacol Energy go up and down completely randomly.
Pair Corralation between ATT and Canacol Energy
Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.4 times more return on investment than Canacol Energy. However, ATT Inc is 2.48 times less risky than Canacol Energy. It trades about 0.18 of its potential returns per unit of risk. Canacol Energy is currently generating about -0.04 per unit of risk. If you would invest 1,752 in ATT Inc on September 1, 2024 and sell it today you would earn a total of 564.00 from holding ATT Inc or generate 32.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
ATT Inc vs. Canacol Energy
Performance |
| Timeline |
| ATT Inc |
| Canacol Energy |
ATT and Canacol Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Canacol Energy
The main advantage of trading using opposite ATT and Canacol Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT 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.The idea behind ATT Inc and Canacol Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Canacol Energy vs. PetroShale | Canacol Energy vs. Inpex Corp ADR | Canacol Energy vs. Battalion Oil Corp | Canacol Energy vs. Condor Petroleum |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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