Correlation Between Battalion Oil and Otto Energy
Can any of the company-specific risk be diversified away by investing in both Battalion Oil and Otto 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 Otto 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 Otto Energy Limited, you can compare the effects of market volatilities on Battalion Oil and Otto 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 Otto Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Battalion Oil and Otto Energy.
Diversification Opportunities for Battalion Oil and Otto Energy
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Battalion and Otto is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Battalion Oil Corp and Otto Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otto Energy Limited 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 Otto Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otto Energy Limited has no effect on the direction of Battalion Oil i.e., Battalion Oil and Otto Energy go up and down completely randomly.
Pair Corralation between Battalion Oil and Otto Energy
Given the investment horizon of 90 days Battalion Oil Corp is expected to generate 0.79 times more return on investment than Otto Energy. However, Battalion Oil Corp is 1.27 times less risky than Otto Energy. It trades about -0.17 of its potential returns per unit of risk. Otto Energy Limited is currently generating about -0.21 per unit of risk. If you would invest 670.00 in Battalion Oil Corp on September 1, 2024 and sell it today you would lose (324.00) from holding Battalion Oil Corp or give up 48.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Battalion Oil Corp vs. Otto Energy Limited
Performance |
| Timeline |
| Battalion Oil Corp |
| Otto Energy Limited |
Battalion Oil and Otto Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Battalion Oil and Otto Energy
The main advantage of trading using opposite Battalion Oil and Otto Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Battalion Oil position performs unexpectedly, Otto 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 Otto Energy will offset losses from the drop in Otto Energy's long position.| Battalion Oil vs. Epsilon Energy | Battalion Oil vs. Citizens Community Bancorp | Battalion Oil vs. Perma Pipe International Holdings | Battalion Oil vs. Amplify Energy Corp |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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