Correlation Between Tamarack Valley and Tourmaline Oil
Can any of the company-specific risk be diversified away by investing in both Tamarack Valley and Tourmaline Oil 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 Tamarack Valley and Tourmaline Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tamarack Valley Energy and Tourmaline Oil Corp, you can compare the effects of market volatilities on Tamarack Valley and Tourmaline Oil 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 Tamarack Valley with a short position of Tourmaline Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tamarack Valley and Tourmaline Oil.
Diversification Opportunities for Tamarack Valley and Tourmaline Oil
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tamarack and Tourmaline is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Tamarack Valley Energy and Tourmaline Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tourmaline Oil Corp and Tamarack Valley 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 Tamarack Valley Energy are associated (or correlated) with Tourmaline Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tourmaline Oil Corp has no effect on the direction of Tamarack Valley i.e., Tamarack Valley and Tourmaline Oil go up and down completely randomly.
Pair Corralation between Tamarack Valley and Tourmaline Oil
Assuming the 90 days trading horizon Tamarack Valley Energy is expected to generate 1.14 times more return on investment than Tourmaline Oil. However, Tamarack Valley is 1.14 times more volatile than Tourmaline Oil Corp. It trades about 0.17 of its potential returns per unit of risk. Tourmaline Oil Corp is currently generating about 0.1 per unit of risk. If you would invest 415.00 in Tamarack Valley Energy on September 1, 2024 and sell it today you would earn a total of 31.00 from holding Tamarack Valley Energy or generate 7.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tamarack Valley Energy vs. Tourmaline Oil Corp
Performance |
| Timeline |
| Tamarack Valley Energy |
| Tourmaline Oil Corp |
Tamarack Valley and Tourmaline Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tamarack Valley and Tourmaline Oil
The main advantage of trading using opposite Tamarack Valley and Tourmaline Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tamarack Valley position performs unexpectedly, Tourmaline Oil 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 Tourmaline Oil will offset losses from the drop in Tourmaline Oil's long position.| Tamarack Valley vs. MEG Energy Corp | Tamarack Valley vs. Cardinal Energy | Tamarack Valley vs. Athabasca Oil Corp | Tamarack Valley vs. Whitecap Resources |
| Tourmaline Oil vs. ARC Resources | Tourmaline Oil vs. Whitecap Resources | Tourmaline Oil vs. MEG Energy Corp | Tourmaline Oil vs. Birchcliff Energy |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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