Correlation Between Whitecap Resources and Freehold Royalties
Can any of the company-specific risk be diversified away by investing in both Whitecap Resources and Freehold Royalties 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 Freehold Royalties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Whitecap Resources and Freehold Royalties, you can compare the effects of market volatilities on Whitecap Resources and Freehold Royalties 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 Freehold Royalties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whitecap Resources and Freehold Royalties.
Diversification Opportunities for Whitecap Resources and Freehold Royalties
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Whitecap and Freehold is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Whitecap Resources and Freehold Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freehold Royalties 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 Freehold Royalties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freehold Royalties has no effect on the direction of Whitecap Resources i.e., Whitecap Resources and Freehold Royalties go up and down completely randomly.
Pair Corralation between Whitecap Resources and Freehold Royalties
Assuming the 90 days trading horizon Whitecap Resources is expected to under-perform the Freehold Royalties. In addition to that, Whitecap Resources is 1.38 times more volatile than Freehold Royalties. It trades about -0.25 of its total potential returns per unit of risk. Freehold Royalties is currently generating about -0.19 per unit of volatility. If you would invest 1,308 in Freehold Royalties on November 3, 2024 and sell it today you would lose (58.00) from holding Freehold Royalties or give up 4.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Whitecap Resources vs. Freehold Royalties
Performance |
| Timeline |
| Whitecap Resources |
| Freehold Royalties |
Whitecap Resources and Freehold Royalties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Whitecap Resources and Freehold Royalties
The main advantage of trading using opposite Whitecap Resources and Freehold Royalties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whitecap Resources position performs unexpectedly, Freehold Royalties 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 Freehold Royalties will offset losses from the drop in Freehold Royalties' 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 |
| Freehold Royalties vs. ARC Resources | Freehold Royalties vs. Whitecap Resources | Freehold Royalties vs. Peyto ExplorationDevelopment Corp | Freehold Royalties vs. Tourmaline 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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