Correlation Between Valeura Energy and Canacol Energy
Can any of the company-specific risk be diversified away by investing in both Valeura Energy 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 Valeura Energy and Canacol Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valeura Energy and Canacol Energy, you can compare the effects of market volatilities on Valeura Energy 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 Valeura Energy with a short position of Canacol Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valeura Energy and Canacol Energy.
Diversification Opportunities for Valeura Energy and Canacol Energy
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Valeura and Canacol is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Valeura Energy and Canacol Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canacol Energy and Valeura 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 Valeura Energy 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 Valeura Energy i.e., Valeura Energy and Canacol Energy go up and down completely randomly.
Pair Corralation between Valeura Energy and Canacol Energy
Assuming the 90 days horizon Valeura Energy is expected to generate 1.19 times more return on investment than Canacol Energy. However, Valeura Energy is 1.19 times more volatile than Canacol Energy. It trades about 0.01 of its potential returns per unit of risk. Canacol Energy is currently generating about -0.03 per unit of risk. If you would invest 400.00 in Valeura Energy on August 28, 2024 and sell it today you would lose (8.00) from holding Valeura Energy or give up 2.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valeura Energy vs. Canacol Energy
Performance |
| Timeline |
| Valeura Energy |
| Canacol Energy |
Valeura Energy and Canacol Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valeura Energy and Canacol Energy
The main advantage of trading using opposite Valeura Energy and Canacol Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valeura Energy 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.| Valeura Energy vs. Legacy Education | Valeura Energy vs. NVIDIA | Valeura Energy vs. Apple Inc | Valeura Energy vs. Microsoft |
| Canacol Energy vs. Petroleo Brasileiro Petrobras | Canacol Energy vs. Equinor ASA ADR | Canacol Energy vs. Eni SpA ADR | Canacol Energy vs. YPF Sociedad Anonima |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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