Correlation Between Capricorn Energy and Canadian Natural
Can any of the company-specific risk be diversified away by investing in both Capricorn Energy 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 Capricorn Energy and Canadian Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capricorn Energy PLC and Canadian Natural Resources, you can compare the effects of market volatilities on Capricorn Energy 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 Capricorn Energy with a short position of Canadian Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capricorn Energy and Canadian Natural.
Diversification Opportunities for Capricorn Energy and Canadian Natural
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capricorn and Canadian is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Capricorn Energy PLC 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 Capricorn 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 Capricorn Energy PLC 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 Capricorn Energy i.e., Capricorn Energy and Canadian Natural go up and down completely randomly.
Pair Corralation between Capricorn Energy and Canadian Natural
Assuming the 90 days horizon Capricorn Energy PLC is expected to generate 10.32 times more return on investment than Canadian Natural. However, Capricorn Energy is 10.32 times more volatile than Canadian Natural Resources. It trades about 0.1 of its potential returns per unit of risk. Canadian Natural Resources is currently generating about 0.04 per unit of risk. If you would invest 768.00 in Capricorn Energy PLC on January 25, 2024 and sell it today you would lose (338.00) from holding Capricorn Energy PLC or give up 44.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Capricorn Energy PLC vs. Canadian Natural Resources
Performance |
| Timeline |
| Capricorn Energy PLC |
| Canadian Natural Res |
Capricorn Energy and Canadian Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capricorn Energy and Canadian Natural
The main advantage of trading using opposite Capricorn Energy and Canadian Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capricorn Energy 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.| Capricorn Energy vs. San Leon Energy | Capricorn Energy vs. Tullow Oil PLC | Capricorn Energy vs. Dno ASA | Capricorn Energy vs. PetroShale |
| Canadian Natural vs. North European Oil | Canadian Natural vs. Evolution Petroleum | Canadian Natural vs. Matador 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 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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