Correlation Between Capricorn Energy and ARC Resources

Can any of the company-specific risk be diversified away by investing in both Capricorn 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 Capricorn 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 Capricorn Energy PLC and ARC Resources, you can compare the effects of market volatilities on Capricorn 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 Capricorn Energy with a short position of ARC Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capricorn Energy and ARC Resources.

Diversification Opportunities for Capricorn Energy and ARC Resources

0.0

Correlation Coefficient

Capricorn Energy  ARC Resources

Pay attention - limited upside

The 3 months correlation between Capricorn and ARC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Capricorn Energy PLC and ARC Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARC Resources and Capricorn 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 Capricorn Energy PLC 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 Capricorn Energy i.e., Capricorn Energy and ARC Resources go up and down completely randomly.

Pair Corralation between Capricorn Energy and ARC Resources

If you would invest  740.00  in Capricorn Energy PLC on December 29, 2024 and sell it today you would lose (40.00) from holding Capricorn Energy PLC or give up 5.41% of portfolio value over 90 days.

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

Capricorn Energy PLC  vs.  ARC Resources

Capricorn Energy PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capricorn Energy PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Capricorn Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 Capricorn Energy and ARC Resources

The main advantage of trading using opposite Capricorn Energy and ARC Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capricorn 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 Capricorn Energy PLC 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.