Correlation Between Whitecap Resources and Cardinal Energy
Can any of the company-specific risk be diversified away by investing in both Whitecap Resources 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 Whitecap Resources and Cardinal 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 Cardinal Energy, you can compare the effects of market volatilities on Whitecap Resources 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 Whitecap Resources with a short position of Cardinal Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whitecap Resources and Cardinal Energy.
Diversification Opportunities for Whitecap Resources and Cardinal Energy
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Whitecap and Cardinal is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Whitecap Resources and Cardinal Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal 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 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 Whitecap Resources i.e., Whitecap Resources and Cardinal Energy go up and down completely randomly.
Pair Corralation between Whitecap Resources and Cardinal Energy
Assuming the 90 days trading horizon Whitecap Resources is expected to under-perform the Cardinal Energy. In addition to that, Whitecap Resources is 1.35 times more volatile than Cardinal Energy. It trades about -0.06 of its total potential returns per unit of risk. Cardinal Energy is currently generating about 0.18 per unit of volatility. If you would invest 639.00 in Cardinal Energy on August 29, 2024 and sell it today you would earn a total of 26.00 from holding Cardinal Energy or generate 4.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Whitecap Resources vs. Cardinal Energy
Performance |
| Timeline |
| Whitecap Resources |
| Cardinal Energy |
Whitecap Resources and Cardinal Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Whitecap Resources and Cardinal Energy
The main advantage of trading using opposite Whitecap Resources and Cardinal Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whitecap Resources 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.| Whitecap Resources vs. Yangarra Resources | Whitecap Resources vs. iShares Canadian HYBrid | Whitecap Resources vs. Altagas Cum Red | Whitecap Resources vs. European Residential Real |
| Cardinal Energy vs. Tamarack Valley Energy | Cardinal Energy vs. Gear Energy | Cardinal Energy vs. Whitecap Resources | Cardinal Energy vs. Athabasca Oil Corp |
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
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |