Correlation Between Whitecap Resources and Peyto ExplorationDevel

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

By analyzing existing cross correlation between Whitecap Resources and Peyto ExplorationDevelopment Corp, you can compare the effects of market volatilities on Whitecap Resources and Peyto ExplorationDevel 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 Whitecap Resources with a short position of Peyto ExplorationDevel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whitecap Resources and Peyto ExplorationDevel.

Diversification Opportunities for Whitecap Resources and Peyto ExplorationDevel

0.17

Correlation Coefficient

Whitecap Resources  Peyto ExplorationDevel

Average diversification

The 3 months correlation between Whitecap and Peyto is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Whitecap Resources and Peyto ExplorationDevelopment C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peyto ExplorationDevel and Whitecap Resources 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 Whitecap Resources are associated (or correlated) with Peyto ExplorationDevel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peyto ExplorationDevel has no effect on the direction of Whitecap Resources i.e., Whitecap Resources and Peyto ExplorationDevel go up and down completely randomly.

Pair Corralation between Whitecap Resources and Peyto ExplorationDevel

Assuming the 90 days trading horizon Whitecap Resources is expected to under-perform the Peyto ExplorationDevel. In addition to that, Whitecap Resources is 1.63 times more volatile than Peyto ExplorationDevelopment Corp. It trades about -0.03 of its total potential returns per unit of risk. Peyto ExplorationDevelopment Corp is currently generating about 0.09 per unit of volatility. If you would invest  1,667  in Peyto ExplorationDevelopment Corp on December 30, 2024 and sell it today you would earn a total of  143.00  from holding Peyto ExplorationDevelopment Corp or generate 8.58% return on investment over 90 days.

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

Whitecap Resources  vs.  Peyto ExplorationDevelopment C

Whitecap Resources

Risk-Adjusted Performance

Very Weak

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

Peyto ExplorationDevel

Risk-Adjusted Performance

OK

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

Pair Trading with Whitecap Resources and Peyto ExplorationDevel

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

The idea behind Whitecap Resources and Peyto ExplorationDevelopment Corp 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.