Correlation Between Tourmaline Oil and Whitecap Resources
Can any of the company-specific risk be diversified away by investing in both Tourmaline Oil and Whitecap Resources 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 Tourmaline Oil and Whitecap Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tourmaline Oil Corp and Whitecap Resources, you can compare the effects of market volatilities on Tourmaline Oil and Whitecap Resources 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 Tourmaline Oil with a short position of Whitecap Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tourmaline Oil and Whitecap Resources.
Diversification Opportunities for Tourmaline Oil and Whitecap Resources
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Tourmaline and Whitecap is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Tourmaline Oil Corp and Whitecap Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitecap Resources and Tourmaline Oil 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 Tourmaline Oil Corp are associated (or correlated) with Whitecap Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitecap Resources has no effect on the direction of Tourmaline Oil i.e., Tourmaline Oil and Whitecap Resources go up and down completely randomly.
Pair Corralation between Tourmaline Oil and Whitecap Resources
Assuming the 90 days trading horizon Tourmaline Oil Corp is expected to generate 1.05 times more return on investment than Whitecap Resources. However, Tourmaline Oil is 1.05 times more volatile than Whitecap Resources. It trades about 0.04 of its potential returns per unit of risk. Whitecap Resources is currently generating about 0.01 per unit of risk. If you would invest 5,278 in Tourmaline Oil Corp on November 19, 2024 and sell it today you would earn a total of 1,480 from holding Tourmaline Oil Corp or generate 28.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tourmaline Oil Corp vs. Whitecap Resources
Performance |
| Timeline |
| Tourmaline Oil Corp |
| Whitecap Resources |
Tourmaline Oil and Whitecap Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tourmaline Oil and Whitecap Resources
The main advantage of trading using opposite Tourmaline Oil and Whitecap Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tourmaline Oil position performs unexpectedly, Whitecap Resources 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 Whitecap Resources will offset losses from the drop in Whitecap Resources' long position.| Tourmaline Oil vs. ARC Resources | Tourmaline Oil vs. Whitecap Resources | Tourmaline Oil vs. MEG Energy Corp | Tourmaline Oil vs. Birchcliff Energy |
| Whitecap Resources vs. ARC Resources | Whitecap Resources vs. Tourmaline Oil Corp | Whitecap Resources vs. MEG Energy Corp | Whitecap Resources vs. Baytex Energy 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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