Correlation Between Adyen NV and Canadian Natural

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

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

Diversification Opportunities for Adyen NV and Canadian Natural

-0.07

Correlation Coefficient

Adyen NV  Canadian Natural

Good diversification

The 3 months correlation between Adyen and Canadian is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Adyen NV and Canadian Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Natural Res and Adyen NV 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 Adyen NV are associated (or correlated) with Canadian Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Natural Res has no effect on the direction of Adyen NV i.e., Adyen NV and Canadian Natural go up and down completely randomly.

Pair Corralation between Adyen NV and Canadian Natural

Assuming the 90 days horizon Adyen NV is expected to generate 1.23 times less return on investment than Canadian Natural. In addition to that, Adyen NV is 1.91 times more volatile than Canadian Natural Resources. It trades about 0.02 of its total potential returns per unit of risk. Canadian Natural Resources is currently generating about 0.04 per unit of volatility. If you would invest  2,281  in Canadian Natural Resources on October 5, 2024 and sell it today you would earn a total of  749.00  from holding Canadian Natural Resources or generate 32.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.6%
Values	Daily Returns

Adyen NV  vs.  Canadian Natural Resources

Adyen NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adyen NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Adyen NV is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

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. Despite nearly stable basic indicators, Canadian Natural is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Adyen NV and Canadian Natural

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

The idea behind Adyen NV and Canadian Natural 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.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.