Correlation Between Pioneer Natural and Canadian Natural
Can any of the company-specific risk be diversified away by investing in both Pioneer Natural 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 Pioneer Natural and Canadian Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pioneer Natural Resources and Canadian Natural Resources, you can compare the effects of market volatilities on Pioneer Natural 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 Pioneer Natural with a short position of Canadian Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pioneer Natural and Canadian Natural.
Diversification Opportunities for Pioneer Natural and Canadian Natural
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pioneer and Canadian is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Pioneer Natural Resources 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 Pioneer Natural 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 Pioneer Natural Resources 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 Pioneer Natural i.e., Pioneer Natural and Canadian Natural go up and down completely randomly.
Pair Corralation between Pioneer Natural and Canadian Natural
Considering the 90-day investment horizon Pioneer Natural Resources is expected to generate 0.67 times more return on investment than Canadian Natural. However, Pioneer Natural Resources is 1.49 times less risky than Canadian Natural. It trades about 0.32 of its potential returns per unit of risk. Canadian Natural Resources is currently generating about 0.12 per unit of risk. If you would invest 25,543 in Pioneer Natural Resources on January 21, 2024 and sell it today you would earn a total of 1,488 from holding Pioneer Natural Resources or generate 5.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pioneer Natural Resources vs. Canadian Natural Resources
Performance |
| Timeline |
| Pioneer Natural Resources |
| Canadian Natural Res |
Pioneer Natural and Canadian Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pioneer Natural and Canadian Natural
The main advantage of trading using opposite Pioneer Natural and Canadian Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pioneer Natural 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.| Pioneer Natural vs. Coterra Energy | Pioneer Natural vs. Occidental Petroleum | Pioneer Natural vs. Diamondback Energy | Pioneer Natural vs. ConocoPhillips |
| Canadian Natural vs. Baytex Energy Corp | Canadian Natural vs. Vermilion Energy | Canadian Natural vs. Obsidian Energy | Canadian Natural vs. Ovintiv |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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