Correlation Between Battalion Oil and Earthstone Energy
Can any of the company-specific risk be diversified away by investing in both Battalion Oil and Earthstone 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 Battalion Oil and Earthstone Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Battalion Oil Corp and Earthstone Energy, you can compare the effects of market volatilities on Battalion Oil and Earthstone 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 Battalion Oil with a short position of Earthstone Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Battalion Oil and Earthstone Energy.
Diversification Opportunities for Battalion Oil and Earthstone Energy
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Battalion and Earthstone is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Battalion Oil Corp and Earthstone Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Earthstone Energy and Battalion Oil 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 Battalion Oil Corp are associated (or correlated) with Earthstone Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Earthstone Energy has no effect on the direction of Battalion Oil i.e., Battalion Oil and Earthstone Energy go up and down completely randomly.
Pair Corralation between Battalion Oil and Earthstone Energy
Given the investment horizon of 90 days Battalion Oil is expected to generate 4.13 times less return on investment than Earthstone Energy. In addition to that, Battalion Oil is 2.66 times more volatile than Earthstone Energy. It trades about 0.01 of its total potential returns per unit of risk. Earthstone Energy is currently generating about 0.06 per unit of volatility. If you would invest 1,258 in Earthstone Energy on August 29, 2024 and sell it today you would earn a total of 274.00 from holding Earthstone Energy or generate 21.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 31.52% |
| Values | Daily Returns |
Battalion Oil Corp vs. Earthstone Energy
Performance |
| Timeline |
| Battalion Oil Corp |
| Earthstone Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Battalion Oil and Earthstone Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Battalion Oil and Earthstone Energy
The main advantage of trading using opposite Battalion Oil and Earthstone Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Battalion Oil position performs unexpectedly, Earthstone 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 Earthstone Energy will offset losses from the drop in Earthstone Energy's long position.| Battalion Oil vs. ConocoPhillips | Battalion Oil vs. Occidental Petroleum | Battalion Oil vs. EOG Resources | Battalion Oil vs. Coterra Energy |
| Earthstone Energy vs. Vital Energy | Earthstone Energy vs. Comstock Resources | Earthstone Energy vs. Magnolia Oil Gas | Earthstone Energy vs. Obsidian Energy |
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 Stocks Directory module to find actively traded stocks across global markets.
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