Correlation Between APA and ConocoPhillips
Can any of the company-specific risk be diversified away by investing in both APA 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 APA and ConocoPhillips into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APA Corporation and ConocoPhillips, you can compare the effects of market volatilities on APA 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 APA with a short position of ConocoPhillips. Check out your portfolio center. Please also check ongoing floating volatility patterns of APA and ConocoPhillips.
Diversification Opportunities for APA and ConocoPhillips
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between APA and ConocoPhillips is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding APA Corp. and ConocoPhillips in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConocoPhillips and APA 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 APA Corporation 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 APA i.e., APA and ConocoPhillips go up and down completely randomly.
Pair Corralation between APA and ConocoPhillips
Assuming the 90 days trading horizon APA Corporation is expected to under-perform the ConocoPhillips. In addition to that, APA is 1.25 times more volatile than ConocoPhillips. It trades about -0.03 of its total potential returns per unit of risk. ConocoPhillips is currently generating about 0.04 per unit of volatility. If you would invest 177,767 in ConocoPhillips on September 12, 2024 and sell it today you would earn a total of 31,933 from holding ConocoPhillips or generate 17.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
APA Corp. vs. ConocoPhillips
Performance |
| Timeline |
| APA Corporation |
| ConocoPhillips |
APA and ConocoPhillips Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APA and ConocoPhillips
The main advantage of trading using opposite APA and ConocoPhillips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APA 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.| APA vs. Cognizant Technology Solutions | APA vs. Grupo Sports World | APA vs. United States Steel | APA vs. Samsung Electronics Co |
| ConocoPhillips vs. Delta Air Lines | ConocoPhillips vs. Verizon Communications | ConocoPhillips vs. The Bank of | ConocoPhillips vs. McEwen Mining |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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