Correlation Between Tourmaline Oil and Cardinal Energy
Can any of the company-specific risk be diversified away by investing in both Tourmaline Oil and Cardinal 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 Tourmaline Oil and Cardinal Energy 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 Cardinal Energy, you can compare the effects of market volatilities on Tourmaline Oil and Cardinal 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 Tourmaline Oil with a short position of Cardinal Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tourmaline Oil and Cardinal Energy.
Diversification Opportunities for Tourmaline Oil and Cardinal Energy
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Tourmaline and Cardinal is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Tourmaline Oil Corp and Cardinal Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Energy 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 Cardinal Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Energy has no effect on the direction of Tourmaline Oil i.e., Tourmaline Oil and Cardinal Energy go up and down completely randomly.
Pair Corralation between Tourmaline Oil and Cardinal Energy
Assuming the 90 days horizon Tourmaline Oil Corp is expected to generate 1.03 times more return on investment than Cardinal Energy. However, Tourmaline Oil is 1.03 times more volatile than Cardinal Energy. It trades about 0.03 of its potential returns per unit of risk. Cardinal Energy is currently generating about 0.02 per unit of risk. If you would invest 4,075 in Tourmaline Oil Corp on September 2, 2024 and sell it today you would earn a total of 636.00 from holding Tourmaline Oil Corp or generate 15.61% 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. Cardinal Energy
Performance |
| Timeline |
| Tourmaline Oil Corp |
| Cardinal Energy |
Tourmaline Oil and Cardinal Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tourmaline Oil and Cardinal Energy
The main advantage of trading using opposite Tourmaline Oil and Cardinal Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tourmaline Oil position performs unexpectedly, Cardinal 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 Cardinal Energy will offset losses from the drop in Cardinal Energy's long position.| Tourmaline Oil vs. PrairieSky Royalty | Tourmaline Oil vs. Tamarack Valley Energy | Tourmaline Oil vs. MEG Energy Corp | Tourmaline Oil vs. Cardinal Energy |
| Cardinal Energy vs. Tamarack Valley Energy | Cardinal Energy vs. Pine Cliff Energy | Cardinal Energy vs. MEG Energy Corp | Cardinal Energy vs. Headwater Exploration |
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 Correlations module to find global opportunities by holding instruments from different markets.
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