Correlation Between Vermilion Energy and Whitecap Resources
Can any of the company-specific risk be diversified away by investing in both Vermilion Energy 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 Vermilion Energy and Whitecap Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vermilion Energy and Whitecap Resources, you can compare the effects of market volatilities on Vermilion Energy 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 Vermilion Energy with a short position of Whitecap Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vermilion Energy and Whitecap Resources.
Diversification Opportunities for Vermilion Energy and Whitecap Resources
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vermilion and Whitecap is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Vermilion Energy and Whitecap Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitecap Resources and Vermilion Energy 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 Vermilion Energy 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 Vermilion Energy i.e., Vermilion Energy and Whitecap Resources go up and down completely randomly.
Pair Corralation between Vermilion Energy and Whitecap Resources
Assuming the 90 days trading horizon Vermilion Energy is expected to generate 1.81 times more return on investment than Whitecap Resources. However, Vermilion Energy is 1.81 times more volatile than Whitecap Resources. It trades about 0.12 of its potential returns per unit of risk. Whitecap Resources is currently generating about -0.06 per unit of risk. If you would invest 1,337 in Vermilion Energy on August 28, 2024 and sell it today you would earn a total of 85.00 from holding Vermilion Energy or generate 6.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vermilion Energy vs. Whitecap Resources
Performance |
| Timeline |
| Vermilion Energy |
| Whitecap Resources |
Vermilion Energy and Whitecap Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vermilion Energy and Whitecap Resources
The main advantage of trading using opposite Vermilion Energy and Whitecap Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vermilion Energy 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.| Vermilion Energy vs. Yangarra Resources | Vermilion Energy vs. iShares Canadian HYBrid | Vermilion Energy vs. Altagas Cum Red | Vermilion Energy vs. European Residential Real |
| Whitecap Resources vs. Yangarra Resources | Whitecap Resources vs. iShares Canadian HYBrid | Whitecap Resources vs. Altagas Cum Red | Whitecap Resources vs. European Residential Real |
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 CEOs Directory module to screen CEOs from public companies around the world.
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