Correlation Between Prairie Provident and Pine Cliff

Can any of the company-specific risk be diversified away by investing in both Prairie Provident and Pine Cliff 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 Prairie Provident and Pine Cliff into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Prairie Provident Resources and Pine Cliff Energy, you can compare the effects of market volatilities on Prairie Provident and Pine Cliff 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 Prairie Provident with a short position of Pine Cliff. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prairie Provident and Pine Cliff.

Diversification Opportunities for Prairie Provident and Pine Cliff

-0.33

Correlation Coefficient

Prairie Provident  Pine Cliff

Very good diversification

The 3 months correlation between Prairie and Pine is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Prairie Provident Resources and Pine Cliff Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pine Cliff Energy and Prairie Provident 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 Prairie Provident Resources are associated (or correlated) with Pine Cliff. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pine Cliff Energy has no effect on the direction of Prairie Provident i.e., Prairie Provident and Pine Cliff go up and down completely randomly.

Pair Corralation between Prairie Provident and Pine Cliff

Assuming the 90 days trading horizon Prairie Provident is expected to generate 2.59 times less return on investment than Pine Cliff. In addition to that, Prairie Provident is 2.71 times more volatile than Pine Cliff Energy. It trades about 0.02 of its total potential returns per unit of risk. Pine Cliff Energy is currently generating about 0.13 per unit of volatility. If you would invest  57.00  in Pine Cliff Energy on April 25, 2025 and sell it today you would earn a total of  16.00  from holding Pine Cliff Energy or generate 28.07% return on investment over 90 days.

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

Prairie Provident Resources  vs.  Pine Cliff Energy

Prairie Provident

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Prairie Provident Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Prairie Provident may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pine Cliff Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pine Cliff Energy are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Pine Cliff displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Prairie Provident and Pine Cliff

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

The idea behind Prairie Provident Resources and Pine Cliff 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.

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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.