Correlation Between Source Energy and Trican Well

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

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

Diversification Opportunities for Source Energy and Trican Well

0.83

Correlation Coefficient

Source Energy  Trican Well

Very poor diversification

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

Pair Corralation between Source Energy and Trican Well

Assuming the 90 days trading horizon Source Energy is expected to generate 5.84 times less return on investment than Trican Well. In addition to that, Source Energy is 1.28 times more volatile than Trican Well Service. It trades about 0.03 of its total potential returns per unit of risk. Trican Well Service is currently generating about 0.23 per unit of volatility. If you would invest  427.00  in Trican Well Service on May 13, 2025 and sell it today you would earn a total of  157.00  from holding Trican Well Service or generate 36.77% return on investment over 90 days.

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

Source Energy Services  vs.  Trican Well Service

Source Energy Services

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Source Energy Services are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Source Energy is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Trican Well Service

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Trican Well Service are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Trican Well displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Source Energy and Trican Well

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

The idea behind Source Energy Services and Trican Well Service 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.