Correlation Between Imperial Oil and Canadian Natural
Can any of the company-specific risk be diversified away by investing in both Imperial Oil and Canadian Natural 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 Imperial Oil and Canadian Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Imperial Oil and Canadian Natural Resources, you can compare the effects of market volatilities on Imperial Oil and Canadian Natural 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 Imperial Oil with a short position of Canadian Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imperial Oil and Canadian Natural.
Diversification Opportunities for Imperial Oil and Canadian Natural
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Imperial and Canadian is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Imperial Oil and Canadian Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Natural Res and Imperial Oil 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 Imperial Oil are associated (or correlated) with Canadian Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Natural Res has no effect on the direction of Imperial Oil i.e., Imperial Oil and Canadian Natural go up and down completely randomly.
Pair Corralation between Imperial Oil and Canadian Natural
Assuming the 90 days trading horizon Imperial Oil is expected to generate 1.29 times more return on investment than Canadian Natural. However, Imperial Oil is 1.29 times more volatile than Canadian Natural Resources. It trades about 0.14 of its potential returns per unit of risk. Canadian Natural Resources is currently generating about 0.15 per unit of risk. If you would invest 9,309 in Imperial Oil on January 26, 2024 and sell it today you would earn a total of 382.00 from holding Imperial Oil or generate 4.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Imperial Oil vs. Canadian Natural Resources
Performance |
| Timeline |
| Imperial Oil |
| Canadian Natural Res |
Imperial Oil and Canadian Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Imperial Oil and Canadian Natural
The main advantage of trading using opposite Imperial Oil and Canadian Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imperial Oil position performs unexpectedly, Canadian Natural 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 Canadian Natural will offset losses from the drop in Canadian Natural's long position.| Imperial Oil vs. Forsys Metals Corp | Imperial Oil vs. Pinetree Capital | Imperial Oil vs. Aston Bay Holdings |
| Canadian Natural vs. Forsys Metals Corp | Canadian Natural vs. Pinetree Capital | Canadian Natural vs. Aston Bay Holdings |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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