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

0.44

Correlation Coefficient

Whitecap Resources  Athabasca Oil

Very weak diversification

The 3 months correlation between Whitecap and Athabasca is 0.44. 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 trading horizon Whitecap Resources is expected to generate 0.8 times more return on investment than Athabasca Oil. However, Whitecap Resources is 1.25 times less risky than Athabasca Oil. It trades about 0.05 of its potential returns per unit of risk. Athabasca Oil Corp is currently generating about 0.01 per unit of risk. If you would invest  984.00  in Whitecap Resources on September 1, 2024 and sell it today you would earn a total of  39.00  from holding Whitecap Resources or generate 3.96% return on investment over 90 days.

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

Whitecap Resources  vs.  Athabasca Oil Corp

Whitecap Resources

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Whitecap Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Whitecap Resources is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

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. In spite of very healthy technical indicators, Athabasca Oil is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

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.

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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.