Correlation Between Baytex Energy and Exxon
Can any of the company-specific risk be diversified away by investing in both Baytex Energy and Exxon 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 Baytex Energy and Exxon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baytex Energy Corp and EXXON MOBIL CDR, you can compare the effects of market volatilities on Baytex Energy and Exxon 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 Baytex Energy with a short position of Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baytex Energy and Exxon.
Diversification Opportunities for Baytex Energy and Exxon
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Baytex and Exxon is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Baytex Energy Corp and EXXON MOBIL CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EXXON MOBIL CDR and Baytex 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 Baytex Energy Corp are associated (or correlated) with Exxon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EXXON MOBIL CDR has no effect on the direction of Baytex Energy i.e., Baytex Energy and Exxon go up and down completely randomly.
Pair Corralation between Baytex Energy and Exxon
Assuming the 90 days trading horizon Baytex Energy Corp is expected to under-perform the Exxon. In addition to that, Baytex Energy is 3.12 times more volatile than EXXON MOBIL CDR. It trades about -0.05 of its total potential returns per unit of risk. EXXON MOBIL CDR is currently generating about -0.05 per unit of volatility. If you would invest 2,029 in EXXON MOBIL CDR on January 10, 2025 and sell it today you would lose (65.00) from holding EXXON MOBIL CDR or give up 3.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Baytex Energy Corp vs. EXXON MOBIL CDR
Performance |
| Timeline |
| Baytex Energy Corp |
| EXXON MOBIL CDR |
Baytex Energy and Exxon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baytex Energy and Exxon
The main advantage of trading using opposite Baytex Energy and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baytex Energy position performs unexpectedly, Exxon 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 Exxon will offset losses from the drop in Exxon's long position.| Baytex Energy vs. MEG Energy Corp | Baytex Energy vs. Whitecap Resources | Baytex Energy vs. Athabasca Oil Corp | Baytex Energy vs. Cenovus 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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