Correlation Between Athabasca Oil and Tamarack Valley

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

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

Diversification Opportunities for Athabasca Oil and Tamarack Valley

0.24

Correlation Coefficient

Athabasca Oil  Tamarack Valley

Modest diversification

The 3 months correlation between Athabasca and Tamarack is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Athabasca Oil Corp and Tamarack Valley Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tamarack Valley Energy and Athabasca Oil 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 Athabasca Oil Corp are associated (or correlated) with Tamarack Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tamarack Valley Energy has no effect on the direction of Athabasca Oil i.e., Athabasca Oil and Tamarack Valley go up and down completely randomly.

Pair Corralation between Athabasca Oil and Tamarack Valley

Assuming the 90 days horizon Athabasca Oil Corp is expected to under-perform the Tamarack Valley. But the pink sheet apears to be less risky and, when comparing its historical volatility, Athabasca Oil Corp is 1.12 times less risky than Tamarack Valley. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Tamarack Valley Energy is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  282.00  in Tamarack Valley Energy on August 31, 2024 and sell it today you would earn a total of  32.00  from holding Tamarack Valley Energy or generate 11.35% return on investment over 90 days.

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

Athabasca Oil Corp  vs.  Tamarack Valley Energy

Athabasca Oil Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Tamarack Valley Energy

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tamarack Valley Energy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Tamarack Valley may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Athabasca Oil and Tamarack Valley

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

The idea behind Athabasca Oil Corp and Tamarack Valley Energy 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.