Correlation Between Battalion Oil and PrimeEnergy
Can any of the company-specific risk be diversified away by investing in both Battalion Oil and PrimeEnergy 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 PrimeEnergy 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 PrimeEnergy, you can compare the effects of market volatilities on Battalion Oil and PrimeEnergy 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 PrimeEnergy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Battalion Oil and PrimeEnergy.
Diversification Opportunities for Battalion Oil and PrimeEnergy
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Battalion and PrimeEnergy is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Battalion Oil Corp and PrimeEnergy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PrimeEnergy 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 PrimeEnergy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PrimeEnergy has no effect on the direction of Battalion Oil i.e., Battalion Oil and PrimeEnergy go up and down completely randomly.
Pair Corralation between Battalion Oil and PrimeEnergy
Given the investment horizon of 90 days Battalion Oil is expected to generate 2.36 times less return on investment than PrimeEnergy. In addition to that, Battalion Oil is 3.95 times more volatile than PrimeEnergy. It trades about 0.02 of its total potential returns per unit of risk. PrimeEnergy is currently generating about 0.15 per unit of volatility. If you would invest 12,000 in PrimeEnergy on August 25, 2024 and sell it today you would earn a total of 8,295 from holding PrimeEnergy or generate 69.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Battalion Oil Corp vs. PrimeEnergy
Performance |
| Timeline |
| Battalion Oil Corp |
| PrimeEnergy |
Battalion Oil and PrimeEnergy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Battalion Oil and PrimeEnergy
The main advantage of trading using opposite Battalion Oil and PrimeEnergy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Battalion Oil position performs unexpectedly, PrimeEnergy 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 PrimeEnergy will offset losses from the drop in PrimeEnergy'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 |
| PrimeEnergy vs. Epsilon Energy | PrimeEnergy vs. Crescent Energy Co | PrimeEnergy vs. Evolution Petroleum | PrimeEnergy vs. MorningStar Partners, LP |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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