Correlation Between Whitecap Resources and Athabasca Oil

Can any of the company-specific risk be diversified away by investing in both Whitecap Resources and Athabasca 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 Whitecap Resources and Athabasca Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Whitecap Resources and Athabasca Oil Corp, you can compare the effects of market volatilities on Whitecap Resources and Athabasca 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 Whitecap Resources with a short position of Athabasca Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whitecap Resources and Athabasca Oil.

Diversification Opportunities for Whitecap Resources and Athabasca Oil

0.13

Correlation Coefficient

Whitecap Resources  Athabasca Oil

Average diversification

The 3 months correlation between Whitecap and Athabasca is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Whitecap Resources and Athabasca Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Athabasca Oil Corp and Whitecap 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 Whitecap Resources are associated (or correlated) with Athabasca Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Athabasca Oil Corp has no effect on the direction of Whitecap Resources i.e., Whitecap Resources and Athabasca Oil go up and down completely randomly.

Pair Corralation between Whitecap Resources and Athabasca Oil

Assuming the 90 days horizon Whitecap Resources is expected to under-perform the Athabasca Oil. But the pink sheet apears to be less risky and, when comparing its historical volatility, Whitecap Resources is 1.49 times less risky than Athabasca Oil. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Athabasca Oil Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  364.00  in Athabasca Oil Corp on February 28, 2024 and sell it today you would lose (3.00) from holding Athabasca Oil Corp or give up 0.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Whitecap Resources  vs.  Athabasca Oil Corp

Whitecap Resources

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Whitecap Resources are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Whitecap Resources may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Athabasca Oil Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Athabasca Oil Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Athabasca Oil is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Whitecap Resources and Athabasca Oil

The main advantage of trading using opposite Whitecap Resources and Athabasca Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whitecap Resources position performs unexpectedly, Athabasca 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 Athabasca Oil will offset losses from the drop in Athabasca Oil's long position.

The idea behind Whitecap Resources and Athabasca Oil Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.