Correlation Between Athabasca Oil and Journey Energy

Can any of the company-specific risk be diversified away by investing in both Athabasca Oil and Journey Energy 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 Journey Energy 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 Journey Energy, you can compare the effects of market volatilities on Athabasca Oil and Journey Energy 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 Journey Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Athabasca Oil and Journey Energy.

Diversification Opportunities for Athabasca Oil and Journey Energy

0.38

Correlation Coefficient

Athabasca Oil  Journey Energy

Weak diversification

The 3 months correlation between Athabasca and Journey is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Athabasca Oil Corp and Journey Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Journey 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 Journey Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Journey Energy has no effect on the direction of Athabasca Oil i.e., Athabasca Oil and Journey Energy go up and down completely randomly.

Pair Corralation between Athabasca Oil and Journey Energy

Assuming the 90 days horizon Athabasca Oil Corp is expected to generate 0.79 times more return on investment than Journey Energy. However, Athabasca Oil Corp is 1.27 times less risky than Journey Energy. It trades about -0.02 of its potential returns per unit of risk. Journey Energy is currently generating about -0.07 per unit of risk. If you would invest  381.00  in Athabasca Oil Corp on September 2, 2024 and sell it today you would lose (16.00) from holding Athabasca Oil Corp or give up 4.2% of portfolio value over 90 days.

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

Athabasca Oil Corp  vs.  Journey 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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Journey Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Journey Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Athabasca Oil and Journey Energy

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

The idea behind Athabasca Oil Corp and Journey 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.