Correlation Between Whitecap Resources and Tourmaline Oil
Can any of the company-specific risk be diversified away by investing in both Whitecap Resources and Tourmaline Oil 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 Tourmaline Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Whitecap Resources and Tourmaline Oil Corp, you can compare the effects of market volatilities on Whitecap Resources and Tourmaline Oil 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 Tourmaline Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whitecap Resources and Tourmaline Oil.
Diversification Opportunities for Whitecap Resources and Tourmaline Oil
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Whitecap and Tourmaline is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Whitecap Resources and Tourmaline Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tourmaline Oil Corp 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 Tourmaline Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tourmaline Oil Corp has no effect on the direction of Whitecap Resources i.e., Whitecap Resources and Tourmaline Oil go up and down completely randomly.
Pair Corralation between Whitecap Resources and Tourmaline Oil
Assuming the 90 days trading horizon Whitecap Resources is expected to under-perform the Tourmaline Oil. But the stock apears to be less risky and, when comparing its historical volatility, Whitecap Resources is 1.34 times less risky than Tourmaline Oil. The stock trades about -0.06 of its potential returns per unit of risk. The Tourmaline Oil Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 6,401 in Tourmaline Oil Corp on August 28, 2024 and sell it today you would earn a total of 222.00 from holding Tourmaline Oil Corp or generate 3.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Whitecap Resources vs. Tourmaline Oil Corp
Performance |
| Timeline |
| Whitecap Resources |
| Tourmaline Oil Corp |
Whitecap Resources and Tourmaline Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Whitecap Resources and Tourmaline Oil
The main advantage of trading using opposite Whitecap Resources and Tourmaline Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whitecap Resources position performs unexpectedly, Tourmaline Oil 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 Tourmaline Oil will offset losses from the drop in Tourmaline Oil'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 |
| Tourmaline Oil vs. ARC Resources | Tourmaline Oil vs. Whitecap Resources | Tourmaline Oil vs. MEG Energy Corp | Tourmaline Oil vs. Birchcliff Energy |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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