Correlation Between Gibson Energy and Capital Power

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

By analyzing existing cross correlation between Gibson Energy and Capital Power, you can compare the effects of market volatilities on Gibson Energy and Capital Power 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 Gibson Energy with a short position of Capital Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gibson Energy and Capital Power.

Diversification Opportunities for Gibson Energy and Capital Power

0.77

Correlation Coefficient

Gibson Energy  Capital Power

Poor diversification

The 3 months correlation between Gibson and Capital is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Gibson Energy and Capital Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Power and Gibson 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 Gibson Energy are associated (or correlated) with Capital Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Power has no effect on the direction of Gibson Energy i.e., Gibson Energy and Capital Power go up and down completely randomly.

Pair Corralation between Gibson Energy and Capital Power

Assuming the 90 days trading horizon Gibson Energy is expected to generate 0.55 times more return on investment than Capital Power. However, Gibson Energy is 1.81 times less risky than Capital Power. It trades about -0.07 of its potential returns per unit of risk. Capital Power is currently generating about -0.13 per unit of risk. If you would invest  2,443  in Gibson Energy on December 30, 2024 and sell it today you would lose (174.00) from holding Gibson Energy or give up 7.12% of portfolio value over 90 days.

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

Gibson Energy  vs.  Capital Power

Gibson Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gibson Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Capital Power

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capital Power has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Gibson Energy and Capital Power

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

The idea behind Gibson Energy and Capital Power 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.