Correlation Between Calfrac Well and Trican Well

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

By analyzing existing cross correlation between Calfrac Well Services and Trican Well Service, you can compare the effects of market volatilities on Calfrac Well and Trican Well 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 Calfrac Well with a short position of Trican Well. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calfrac Well and Trican Well.

Diversification Opportunities for Calfrac Well and Trican Well

0.56

Correlation Coefficient

Calfrac Well  Trican Well

Very weak diversification

The 3 months correlation between Calfrac and Trican is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Calfrac Well Services and Trican Well Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trican Well Service and Calfrac Well 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 Calfrac Well Services are associated (or correlated) with Trican Well. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trican Well Service has no effect on the direction of Calfrac Well i.e., Calfrac Well and Trican Well go up and down completely randomly.

Pair Corralation between Calfrac Well and Trican Well

Assuming the 90 days trading horizon Calfrac Well Services is expected to under-perform the Trican Well. But the stock apears to be less risky and, when comparing its historical volatility, Calfrac Well Services is 1.42 times less risky than Trican Well. The stock trades about -0.01 of its potential returns per unit of risk. The Trican Well Service is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  484.00  in Trican Well Service on September 2, 2024 and sell it today you would earn a total of  5.00  from holding Trican Well Service or generate 1.03% return on investment over 90 days.

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

Calfrac Well Services  vs.  Trican Well Service

Calfrac Well Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calfrac Well Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Calfrac Well is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Trican Well Service

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Trican Well Service are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Trican Well is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Calfrac Well and Trican Well

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

The idea behind Calfrac Well Services and Trican Well Service 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.