Correlation Between Battalion Oil and United Energy
Can any of the company-specific risk be diversified away by investing in both Battalion Oil and United 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 United 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 United Energy Corp, you can compare the effects of market volatilities on Battalion Oil and United 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 United Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Battalion Oil and United Energy.
Diversification Opportunities for Battalion Oil and United Energy
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Battalion and United is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Battalion Oil Corp and United Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Energy Corp 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 United Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Energy Corp has no effect on the direction of Battalion Oil i.e., Battalion Oil and United Energy go up and down completely randomly.
Pair Corralation between Battalion Oil and United Energy
Given the investment horizon of 90 days Battalion Oil is expected to generate 4.23 times less return on investment than United Energy. But when comparing it to its historical volatility, Battalion Oil Corp is 1.0 times less risky than United Energy. It trades about 0.01 of its potential returns per unit of risk. United Energy Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 5.00 in United Energy Corp on September 3, 2024 and sell it today you would lose (0.50) from holding United Energy Corp or give up 10.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Battalion Oil Corp vs. United Energy Corp
Performance |
| Timeline |
| Battalion Oil Corp |
| United Energy Corp |
Battalion Oil and United Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Battalion Oil and United Energy
The main advantage of trading using opposite Battalion Oil and United Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Battalion Oil position performs unexpectedly, United 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 United Energy will offset losses from the drop in United 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 |
| United Energy vs. Advantage Solutions | United Energy vs. Atlas Corp | United Energy vs. PureCycle Technologies | United Energy vs. WM Technology |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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