Correlation Between Canadian Natural and NFI

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

Diversification Opportunities for Canadian Natural and NFI

0.66

Correlation Coefficient

Canadian Natural  NFI

Poor diversification

The 3 months correlation between Canadian and NFI is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Natural Resources and NFI Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NFI Group 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 NFI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NFI Group has no effect on the direction of Canadian Natural i.e., Canadian Natural and NFI go up and down completely randomly.

Pair Corralation between Canadian Natural and NFI

Assuming the 90 days trading horizon Canadian Natural is expected to generate 7.31 times less return on investment than NFI. But when comparing it to its historical volatility, Canadian Natural Resources is 1.54 times less risky than NFI. It trades about 0.07 of its potential returns per unit of risk. NFI Group is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  1,177  in NFI Group on April 25, 2025 and sell it today you would earn a total of  739.00  from holding NFI Group or generate 62.79% return on investment over 90 days.

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

Canadian Natural Resources  vs.  NFI Group

Canadian Natural Res

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Natural Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Canadian Natural may actually be approaching a critical reversion point that can send shares even higher in August 2025.

NFI Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NFI Group are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, NFI displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canadian Natural and NFI

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

The idea behind Canadian Natural Resources and NFI Group 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.