Correlation Between ARC Resources and Whitecap Resources

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

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

Diversification Opportunities for ARC Resources and Whitecap Resources

0.11

Correlation Coefficient

ARC Resources  Whitecap Resources

Average diversification

The 3 months correlation between ARC and Whitecap is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding ARC Resources and Whitecap Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitecap Resources and ARC 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 ARC Resources are associated (or correlated) with Whitecap Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitecap Resources has no effect on the direction of ARC Resources i.e., ARC Resources and Whitecap Resources go up and down completely randomly.

Pair Corralation between ARC Resources and Whitecap Resources

If you would invest  725.00  in Whitecap Resources on August 31, 2024 and sell it today you would earn a total of  3.00  from holding Whitecap Resources or generate 0.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

ARC Resources  vs.  Whitecap Resources

ARC Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ARC Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ARC Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Whitecap Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Whitecap Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Whitecap Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ARC Resources and Whitecap Resources

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

The idea behind ARC Resources and Whitecap Resources 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..