Correlation Between Barrel Energy and Saturn Oil
Can any of the company-specific risk be diversified away by investing in both Barrel Energy and Saturn Oil 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 Barrel Energy and Saturn Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barrel Energy and Saturn Oil Gas, you can compare the effects of market volatilities on Barrel Energy and Saturn Oil 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 Barrel Energy with a short position of Saturn Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barrel Energy and Saturn Oil.
Diversification Opportunities for Barrel Energy and Saturn Oil
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Barrel and Saturn is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Barrel Energy and Saturn Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saturn Oil Gas and Barrel Energy 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 Barrel Energy are associated (or correlated) with Saturn Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saturn Oil Gas has no effect on the direction of Barrel Energy i.e., Barrel Energy and Saturn Oil go up and down completely randomly.
Pair Corralation between Barrel Energy and Saturn Oil
Given the investment horizon of 90 days Barrel Energy is expected to generate 7.45 times more return on investment than Saturn Oil. However, Barrel Energy is 7.45 times more volatile than Saturn Oil Gas. It trades about 0.05 of its potential returns per unit of risk. Saturn Oil Gas is currently generating about -0.05 per unit of risk. If you would invest 0.54 in Barrel Energy on September 12, 2024 and sell it today you would lose (0.29) from holding Barrel Energy or give up 53.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barrel Energy vs. Saturn Oil Gas
Performance |
| Timeline |
| Barrel Energy |
| Saturn Oil Gas |
Barrel Energy and Saturn Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barrel Energy and Saturn Oil
The main advantage of trading using opposite Barrel Energy and Saturn Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barrel Energy position performs unexpectedly, Saturn Oil 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 Saturn Oil will offset losses from the drop in Saturn Oil's long position.| Barrel Energy vs. Permian Resources | Barrel Energy vs. Devon Energy | Barrel Energy vs. EOG Resources | Barrel Energy vs. Coterra Energy |
| Saturn Oil vs. Permian Resources | Saturn Oil vs. Devon Energy | Saturn Oil vs. EOG Resources | Saturn Oil vs. Coterra 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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