Correlation Between Canadian Natural and Borders Southern

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

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

Diversification Opportunities for Canadian Natural and Borders Southern

-0.37

Correlation Coefficient

Canadian Natural  Borders Southern

Very good diversification

The 3 months correlation between Canadian and Borders is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Natural Resources and Borders Southern Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borders Southern Pet and Canadian Natural 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 Natural Resources are associated (or correlated) with Borders Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Borders Southern Pet has no effect on the direction of Canadian Natural i.e., Canadian Natural and Borders Southern go up and down completely randomly.

Pair Corralation between Canadian Natural and Borders Southern

Considering the 90-day investment horizon Canadian Natural Resources is expected to generate 4.93 times more return on investment than Borders Southern. However, Canadian Natural is 4.93 times more volatile than Borders Southern Petroleum. It trades about -0.01 of its potential returns per unit of risk. Borders Southern Petroleum is currently generating about -0.12 per unit of risk. If you would invest  3,441  in Canadian Natural Resources on September 1, 2024 and sell it today you would lose (59.00) from holding Canadian Natural Resources or give up 1.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Canadian Natural Resources  vs.  Borders Southern Petroleum

Canadian Natural Res

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canadian Natural Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Canadian Natural is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Borders Southern Pet

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Canadian Natural and Borders Southern

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

The idea behind Canadian Natural Resources and Borders Southern Petroleum 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.