Correlation Between Xtra Energy and XCana Petroleum
Can any of the company-specific risk be diversified away by investing in both Xtra Energy and XCana Petroleum 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 Xtra Energy and XCana Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtra Energy Corp and XCana Petroleum, you can compare the effects of market volatilities on Xtra Energy and XCana Petroleum 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 Xtra Energy with a short position of XCana Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtra Energy and XCana Petroleum.
Diversification Opportunities for Xtra Energy and XCana Petroleum
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Xtra and XCana is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Xtra Energy Corp and XCana Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XCana Petroleum and Xtra 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 Xtra Energy Corp are associated (or correlated) with XCana Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XCana Petroleum has no effect on the direction of Xtra Energy i.e., Xtra Energy and XCana Petroleum go up and down completely randomly.
Pair Corralation between Xtra Energy and XCana Petroleum
Given the investment horizon of 90 days Xtra Energy Corp is expected to under-perform the XCana Petroleum. But the pink sheet apears to be less risky and, when comparing its historical volatility, Xtra Energy Corp is 4.51 times less risky than XCana Petroleum. The pink sheet trades about -0.01 of its potential returns per unit of risk. The XCana Petroleum is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3.61 in XCana Petroleum on August 31, 2024 and sell it today you would lose (1.01) from holding XCana Petroleum or give up 27.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtra Energy Corp vs. XCana Petroleum
Performance |
| Timeline |
| Xtra Energy Corp |
| XCana Petroleum |
Xtra Energy and XCana Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtra Energy and XCana Petroleum
The main advantage of trading using opposite Xtra Energy and XCana Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtra Energy position performs unexpectedly, XCana Petroleum 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 XCana Petroleum will offset losses from the drop in XCana Petroleum's long position.| Xtra Energy vs. XCana Petroleum | Xtra Energy vs. New Generation Consumer | Xtra Energy vs. Arsenal Digital Holdings | Xtra Energy vs. UHF Logistics Group |
| XCana Petroleum vs. Xtra Energy Corp | XCana Petroleum vs. A1 Group | XCana Petroleum vs. New Generation Consumer | XCana Petroleum vs. Palayan 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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