Correlation Between Parex Resources and Canadian Natural
Can any of the company-specific risk be diversified away by investing in both Parex Resources 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 Parex Resources and Canadian Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parex Resources and Canadian Natural Resources, you can compare the effects of market volatilities on Parex Resources 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 Parex Resources with a short position of Canadian Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parex Resources and Canadian Natural.
Diversification Opportunities for Parex Resources and Canadian Natural
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Parex and Canadian is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Parex 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 Parex 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 Parex 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 Parex Resources i.e., Parex Resources and Canadian Natural go up and down completely randomly.
Pair Corralation between Parex Resources and Canadian Natural
Assuming the 90 days horizon Parex Resources is expected to generate 3.31 times less return on investment than Canadian Natural. In addition to that, Parex Resources is 1.2 times more volatile than Canadian Natural Resources. It trades about 0.01 of its total potential returns per unit of risk. Canadian Natural Resources is currently generating about 0.04 per unit of volatility. If you would invest 5,514 in Canadian Natural Resources on January 17, 2024 and sell it today you would earn a total of 2,240 from holding Canadian Natural Resources or generate 40.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Parex Resources vs. Canadian Natural Resources
Performance |
| Timeline |
| Parex Resources |
| Canadian Natural Res |
Parex Resources and Canadian Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parex Resources and Canadian Natural
The main advantage of trading using opposite Parex Resources and Canadian Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parex Resources 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.| Parex Resources vs. Lotus Resources Limited | Parex Resources vs. Namibia Critical Metals | Parex Resources vs. Skyharbour Resources | Parex Resources vs. Pasinex Resources Limited |
| 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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