Correlation Between Bonterra Energy and Crew Energy

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

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

Diversification Opportunities for Bonterra Energy and Crew Energy

0.83

Correlation Coefficient

Bonterra Energy  Crew Energy

Very poor diversification

The 3 months correlation between Bonterra and Crew is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Bonterra Energy Corp and Crew Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crew Energy and Bonterra 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 Bonterra Energy Corp are associated (or correlated) with Crew Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crew Energy has no effect on the direction of Bonterra Energy i.e., Bonterra Energy and Crew Energy go up and down completely randomly.

Pair Corralation between Bonterra Energy and Crew Energy

Assuming the 90 days trading horizon Bonterra Energy Corp is expected to under-perform the Crew Energy. But the stock apears to be less risky and, when comparing its historical volatility, Bonterra Energy Corp is 1.07 times less risky than Crew Energy. The stock trades about -0.41 of its potential returns per unit of risk. The Crew Energy is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  475.00  in Crew Energy on February 7, 2024 and sell it today you would lose (17.00) from holding Crew Energy or give up 3.58% of portfolio value over 90 days.

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

Bonterra Energy Corp  vs.  Crew Energy

Bonterra Energy Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bonterra Energy Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Bonterra Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Crew Energy

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Crew Energy are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Crew Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bonterra Energy and Crew Energy

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

The idea behind Bonterra Energy Corp and Crew Energy 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.