Correlation Between Canadian Natural and Olympia Financial

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

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

Diversification Opportunities for Canadian Natural and Olympia Financial

-0.36

Correlation Coefficient

Canadian Natural  Olympia Financial

Very good diversification

The 3 months correlation between Canadian and Olympia is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Natural Resources and Olympia Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympia Financial and Canadian Natural 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 Canadian Natural Resources are associated (or correlated) with Olympia Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olympia Financial has no effect on the direction of Canadian Natural i.e., Canadian Natural and Olympia Financial go up and down completely randomly.

Pair Corralation between Canadian Natural and Olympia Financial

Assuming the 90 days trading horizon Canadian Natural Resources is expected to under-perform the Olympia Financial. In addition to that, Canadian Natural is 1.33 times more volatile than Olympia Financial Group. It trades about -0.18 of its total potential returns per unit of risk. Olympia Financial Group is currently generating about 0.1 per unit of volatility. If you would invest  10,600  in Olympia Financial Group on September 18, 2024 and sell it today you would earn a total of  250.00  from holding Olympia Financial Group or generate 2.36% return on investment over 90 days.

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

Canadian Natural Resources  vs.  Olympia Financial Group

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. In spite of very healthy basic indicators, Canadian Natural is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Olympia Financial

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Olympia Financial Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Olympia Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Canadian Natural and Olympia Financial

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

The idea behind Canadian Natural Resources and Olympia Financial Group 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 Commodity Directory module to find actively traded commodities issued by global exchanges.