Correlation Between Birchcliff Energy and Stampede Drilling

Can any of the company-specific risk be diversified away by investing in both Birchcliff Energy and Stampede Drilling 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 Birchcliff Energy and Stampede Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Birchcliff Energy and Stampede Drilling

0.5

Correlation Coefficient

Birchcliff Energy  Stampede Drilling

Very weak diversification

The 3 months correlation between Birchcliff and Stampede is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Birchcliff Energy and Stampede Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stampede Drilling and Birchcliff Energy 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 Birchcliff Energy are associated (or correlated) with Stampede Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stampede Drilling has no effect on the direction of Birchcliff Energy i.e., Birchcliff Energy and Stampede Drilling go up and down completely randomly.

Pair Corralation between Birchcliff Energy and Stampede Drilling

Assuming the 90 days trading horizon Birchcliff Energy is expected to under-perform the Stampede Drilling. But the stock apears to be less risky and, when comparing its historical volatility, Birchcliff Energy is 1.86 times less risky than Stampede Drilling. The stock trades about -0.06 of its potential returns per unit of risk. The Stampede Drilling is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Stampede Drilling on September 14, 2024 and sell it today you would lose (1.00) from holding Stampede Drilling or give up 5.0% of portfolio value over 90 days.

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

Birchcliff Energy  vs.  Stampede Drilling

Birchcliff Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Birchcliff Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Stampede Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stampede Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Stampede Drilling is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Birchcliff Energy and Stampede Drilling

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

The idea behind Birchcliff Energy and Stampede Drilling 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.