Correlation Between Canadian Spirit and Tourmaline Oil
Can any of the company-specific risk be diversified away by investing in both Canadian Spirit and Tourmaline Oil 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 Canadian Spirit and Tourmaline Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Spirit Resources and Tourmaline Oil Corp, you can compare the effects of market volatilities on Canadian Spirit and Tourmaline Oil 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 Canadian Spirit with a short position of Tourmaline Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Spirit and Tourmaline Oil.
Diversification Opportunities for Canadian Spirit and Tourmaline Oil
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Canadian and Tourmaline is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Spirit Resources and Tourmaline Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tourmaline Oil Corp and Canadian Spirit 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 Canadian Spirit Resources are associated (or correlated) with Tourmaline Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tourmaline Oil Corp has no effect on the direction of Canadian Spirit i.e., Canadian Spirit and Tourmaline Oil go up and down completely randomly.
Pair Corralation between Canadian Spirit and Tourmaline Oil
Assuming the 90 days horizon Canadian Spirit Resources is expected to generate 2.88 times more return on investment than Tourmaline Oil. However, Canadian Spirit is 2.88 times more volatile than Tourmaline Oil Corp. It trades about 0.03 of its potential returns per unit of risk. Tourmaline Oil Corp is currently generating about 0.02 per unit of risk. If you would invest 9.00 in Canadian Spirit Resources on January 26, 2024 and sell it today you would earn a total of 0.00 from holding Canadian Spirit Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Spirit Resources vs. Tourmaline Oil Corp
Performance |
| Timeline |
| Canadian Spirit Resources |
| Tourmaline Oil Corp |
Canadian Spirit and Tourmaline Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Spirit and Tourmaline Oil
The main advantage of trading using opposite Canadian Spirit and Tourmaline Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Spirit position performs unexpectedly, Tourmaline Oil 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 Tourmaline Oil will offset losses from the drop in Tourmaline Oil's long position.| Canadian Spirit vs. Forsys Metals Corp | Canadian Spirit vs. Pinetree Capital | Canadian Spirit vs. Aston Bay Holdings |
| Tourmaline Oil vs. Forsys Metals Corp | Tourmaline Oil vs. Pinetree Capital | Tourmaline Oil 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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