Correlation Between Canadian Natural and Whitecap Resources

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

Diversification Opportunities for Canadian Natural and Whitecap Resources

0.67

Correlation Coefficient

Canadian Natural  Whitecap Resources

Poor diversification

The 3 months correlation between Canadian and Whitecap is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Natural Resources and Whitecap Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitecap Resources 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 Whitecap Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitecap Resources has no effect on the direction of Canadian Natural i.e., Canadian Natural and Whitecap Resources go up and down completely randomly.

Pair Corralation between Canadian Natural and Whitecap Resources

Considering the 90-day investment horizon Canadian Natural is expected to generate 3.14 times less return on investment than Whitecap Resources. But when comparing it to its historical volatility, Canadian Natural Resources is 1.1 times less risky than Whitecap Resources. It trades about 0.11 of its potential returns per unit of risk. Whitecap Resources is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  752.00  in Whitecap Resources on May 6, 2025 and sell it today you would earn a total of  279.00  from holding Whitecap Resources or generate 37.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Canadian Natural Resources  vs.  Whitecap Resources

Canadian Natural Res

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Natural Resources are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Canadian Natural may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Whitecap Resources

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Whitecap Resources are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Whitecap Resources displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canadian Natural and Whitecap Resources

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

The idea behind Canadian Natural Resources and Whitecap 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.

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.