Correlation Between Whitecap Resources and Power Fi

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

By analyzing existing cross correlation between Whitecap Resources and Power Fi 440, you can compare the effects of market volatilities on Whitecap Resources and Power Fi 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 Power Fi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whitecap Resources and Power Fi.

Diversification Opportunities for Whitecap Resources and Power Fi

0.89

Correlation Coefficient

Whitecap Resources  Power Fi

Very poor diversification

The 3 months correlation between Whitecap and Power is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Whitecap Resources and Power Fi 440 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Fi 440 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 Power Fi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Fi 440 has no effect on the direction of Whitecap Resources i.e., Whitecap Resources and Power Fi go up and down completely randomly.

Pair Corralation between Whitecap Resources and Power Fi

Assuming the 90 days trading horizon Whitecap Resources is expected to generate 1.79 times more return on investment than Power Fi. However, Whitecap Resources is 1.79 times more volatile than Power Fi 440. It trades about 0.31 of its potential returns per unit of risk. Power Fi 440 is currently generating about 0.36 per unit of risk. If you would invest  741.00  in Whitecap Resources on May 4, 2025 and sell it today you would earn a total of  290.00  from holding Whitecap Resources or generate 39.14% return on investment over 90 days.

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

Whitecap Resources  vs.  Power Fi 440

Whitecap Resources

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Whitecap Resources are ranked lower than 24 (%) 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.

Power Fi 440

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Power Fi 440 are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Power Fi sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Whitecap Resources and Power Fi

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

The idea behind Whitecap Resources and Power Fi 440 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.

Check out your portfolio center.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.