Correlation Between Canadian Natural and Ring Energy

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

Diversification Opportunities for Canadian Natural and Ring Energy

-0.15

Correlation Coefficient

Canadian Natural  Ring Energy

Good diversification

The 3 months correlation between Canadian and Ring is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Natural Resources and Ring Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ring Energy 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 Ring Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ring Energy has no effect on the direction of Canadian Natural i.e., Canadian Natural and Ring Energy go up and down completely randomly.

Pair Corralation between Canadian Natural and Ring Energy

Assuming the 90 days horizon Canadian Natural Resources is expected to generate 0.45 times more return on investment than Ring Energy. However, Canadian Natural Resources is 2.22 times less risky than Ring Energy. It trades about 0.05 of its potential returns per unit of risk. Ring Energy is currently generating about -0.05 per unit of risk. If you would invest  2,506  in Canadian Natural Resources on April 22, 2025 and sell it today you would earn a total of  141.00  from holding Canadian Natural Resources or generate 5.63% return on investment over 90 days.

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

Canadian Natural Resources  vs.  Ring Energy

Canadian Natural Res

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Natural Resources are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Canadian Natural may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Ring Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ring Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Canadian Natural and Ring Energy

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

The idea behind Canadian Natural Resources and Ring 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.