Correlation Between Birchcliff Energy and ARC Resources

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

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

Diversification Opportunities for Birchcliff Energy and ARC Resources

0.0

Correlation Coefficient

Birchcliff Energy  ARC Resources

Pay attention - limited upside

The 3 months correlation between Birchcliff and ARC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Birchcliff Energy and ARC Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARC Resources 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 ARC Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARC Resources has no effect on the direction of Birchcliff Energy i.e., Birchcliff Energy and ARC Resources go up and down completely randomly.

Pair Corralation between Birchcliff Energy and ARC Resources

If you would invest  372.00  in Birchcliff Energy on December 29, 2024 and sell it today you would earn a total of  93.00  from holding Birchcliff Energy or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Birchcliff Energy  vs.  ARC Resources

Birchcliff Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Birchcliff Energy are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Birchcliff Energy reported solid returns over the last few months and may actually be approaching a breakup point.

ARC Resources

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Birchcliff Energy and ARC Resources

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

The idea behind Birchcliff Energy and ARC 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.