Correlation Between Baytex Energy and Obsidian Energy
Can any of the company-specific risk be diversified away by investing in both Baytex Energy and Obsidian 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 Baytex Energy and Obsidian Energy 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 Obsidian Energy, you can compare the effects of market volatilities on Baytex Energy and Obsidian 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 Baytex Energy with a short position of Obsidian Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baytex Energy and Obsidian Energy.
Diversification Opportunities for Baytex Energy and Obsidian Energy
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Baytex and Obsidian is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Baytex Energy Corp and Obsidian Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Obsidian Energy 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 Obsidian Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Obsidian Energy has no effect on the direction of Baytex Energy i.e., Baytex Energy and Obsidian Energy go up and down completely randomly.
Pair Corralation between Baytex Energy and Obsidian Energy
Considering the 90-day investment horizon Baytex Energy Corp is expected to under-perform the Obsidian Energy. In addition to that, Baytex Energy is 1.02 times more volatile than Obsidian Energy. It trades about -0.02 of its total potential returns per unit of risk. Obsidian Energy is currently generating about 0.0 per unit of volatility. If you would invest 728.00 in Obsidian Energy on August 23, 2024 and sell it today you would lose (142.00) from holding Obsidian Energy or give up 19.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baytex Energy Corp vs. Obsidian Energy
Performance |
| Timeline |
| Baytex Energy Corp |
| Obsidian Energy |
Baytex Energy and Obsidian Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baytex Energy and Obsidian Energy
The main advantage of trading using opposite Baytex Energy and Obsidian Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baytex Energy position performs unexpectedly, Obsidian 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 Obsidian Energy will offset losses from the drop in Obsidian Energy's long position.| Baytex Energy vs. Vermilion Energy | Baytex Energy vs. Obsidian Energy | Baytex Energy vs. Canadian Natural Resources | Baytex Energy vs. Ovintiv |
| Obsidian Energy vs. Baytex Energy Corp | Obsidian Energy vs. Vermilion Energy | Obsidian Energy vs. Canadian Natural Resources | Obsidian Energy vs. Ovintiv |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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