Correlation Between Black Stone and California Resources
Can any of the company-specific risk be diversified away by investing in both Black Stone and California Resources 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 Black Stone and California Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Stone Minerals and California Resources Corp, you can compare the effects of market volatilities on Black Stone and California Resources 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 Black Stone with a short position of California Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Stone and California Resources.
Diversification Opportunities for Black Stone and California Resources
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Black and California is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Black Stone Minerals and California Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Resources Corp and Black Stone 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 Black Stone Minerals are associated (or correlated) with California Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Resources Corp has no effect on the direction of Black Stone i.e., Black Stone and California Resources go up and down completely randomly.
Pair Corralation between Black Stone and California Resources
Considering the 90-day investment horizon Black Stone Minerals is expected to generate 0.49 times more return on investment than California Resources. However, Black Stone Minerals is 2.06 times less risky than California Resources. It trades about -0.11 of its potential returns per unit of risk. California Resources Corp is currently generating about -0.06 per unit of risk. If you would invest 1,497 in Black Stone Minerals on September 12, 2024 and sell it today you would lose (44.00) from holding Black Stone Minerals or give up 2.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Stone Minerals vs. California Resources Corp
Performance |
| Timeline |
| Black Stone Minerals |
| California Resources Corp |
Black Stone and California Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Stone and California Resources
The main advantage of trading using opposite Black Stone and California Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Stone position performs unexpectedly, California Resources 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 California Resources will offset losses from the drop in California Resources' long position.| Black Stone vs. Dorchester Minerals LP | Black Stone vs. Sitio Royalties Corp | Black Stone vs. MV Oil Trust | Black Stone vs. VOC Energy Trust |
| California Resources vs. Berry Petroleum Corp | California Resources vs. Magnolia Oil Gas | California Resources vs. Comstock Resources | California Resources vs. Gulfport Energy Operating |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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