Correlation Between Canadian Natural and ConocoPhillips

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

Diversification Opportunities for Canadian Natural and ConocoPhillips

0.52

Correlation Coefficient

Canadian Natural  ConocoPhillips

Very weak diversification

The 3 months correlation between Canadian and ConocoPhillips is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Natural Resources and ConocoPhillips in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConocoPhillips 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 ConocoPhillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConocoPhillips has no effect on the direction of Canadian Natural i.e., Canadian Natural and ConocoPhillips go up and down completely randomly.

Pair Corralation between Canadian Natural and ConocoPhillips

Assuming the 90 days horizon Canadian Natural Resources is expected to generate 0.82 times more return on investment than ConocoPhillips. However, Canadian Natural Resources is 1.22 times less risky than ConocoPhillips. It trades about 0.05 of its potential returns per unit of risk. ConocoPhillips is currently generating about 0.04 per unit of risk. If you would invest  2,506  in Canadian Natural Resources on April 21, 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 Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Canadian Natural Resources  vs.  ConocoPhillips

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 unsteady basic indicators, Canadian Natural may actually be approaching a critical reversion point that can send shares even higher in August 2025.

ConocoPhillips

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ConocoPhillips are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ConocoPhillips is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Canadian Natural and ConocoPhillips

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

The idea behind Canadian Natural Resources and ConocoPhillips 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.