Correlation Between Whitecap Resources and Birchcliff Energy
Can any of the company-specific risk be diversified away by investing in both Whitecap Resources and Birchcliff 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 Whitecap Resources and Birchcliff Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Whitecap Resources and Birchcliff Energy, you can compare the effects of market volatilities on Whitecap Resources and Birchcliff 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 Whitecap Resources with a short position of Birchcliff Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whitecap Resources and Birchcliff Energy.
Diversification Opportunities for Whitecap Resources and Birchcliff Energy
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Whitecap and Birchcliff is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Whitecap Resources and Birchcliff Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Birchcliff Energy and Whitecap Resources 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 Whitecap Resources are associated (or correlated) with Birchcliff Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Birchcliff Energy has no effect on the direction of Whitecap Resources i.e., Whitecap Resources and Birchcliff Energy go up and down completely randomly.
Pair Corralation between Whitecap Resources and Birchcliff Energy
Assuming the 90 days trading horizon Whitecap Resources is expected to generate 0.77 times more return on investment than Birchcliff Energy. However, Whitecap Resources is 1.31 times less risky than Birchcliff Energy. It trades about 0.04 of its potential returns per unit of risk. Birchcliff Energy is currently generating about -0.01 per unit of risk. If you would invest 1,003 in Whitecap Resources on August 25, 2024 and sell it today you would earn a total of 69.00 from holding Whitecap Resources or generate 6.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Whitecap Resources vs. Birchcliff Energy
Performance |
| Timeline |
| Whitecap Resources |
| Birchcliff Energy |
Whitecap Resources and Birchcliff Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Whitecap Resources and Birchcliff Energy
The main advantage of trading using opposite Whitecap Resources and Birchcliff Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whitecap Resources position performs unexpectedly, Birchcliff 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 Birchcliff Energy will offset losses from the drop in Birchcliff Energy's long position.| Whitecap Resources vs. ARC Resources | Whitecap Resources vs. Tourmaline Oil Corp | Whitecap Resources vs. MEG Energy Corp | Whitecap Resources vs. Baytex Energy Corp |
| Birchcliff Energy vs. Tourmaline Oil Corp | Birchcliff Energy vs. ARC Resources | Birchcliff Energy vs. NuVista Energy | Birchcliff Energy vs. Whitecap Resources |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |