Correlation Between Canadian Natural and Quebecor

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

Diversification Opportunities for Canadian Natural and Quebecor

0.61

Correlation Coefficient

Canadian Natural  Quebecor

Poor diversification

The 3 months correlation between Canadian and Quebecor is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Natural Resources and Quebecor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quebecor 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 Quebecor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quebecor has no effect on the direction of Canadian Natural i.e., Canadian Natural and Quebecor go up and down completely randomly.

Pair Corralation between Canadian Natural and Quebecor

Assuming the 90 days trading horizon Canadian Natural Resources is expected to generate 1.29 times more return on investment than Quebecor. However, Canadian Natural is 1.29 times more volatile than Quebecor. It trades about 0.05 of its potential returns per unit of risk. Quebecor is currently generating about 0.01 per unit of risk. If you would invest  3,378  in Canadian Natural Resources on October 23, 2024 and sell it today you would earn a total of  1,319  from holding Canadian Natural Resources or generate 39.05% return on investment over 90 days.

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

Canadian Natural Resources  vs.  Quebecor

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.

Quebecor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quebecor 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 stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Canadian Natural and Quebecor

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

The idea behind Canadian Natural Resources and Quebecor 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.