Correlation Between Chord Energy and PDC Energy
Can any of the company-specific risk be diversified away by investing in both Chord Energy and PDC 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 Chord Energy and PDC Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chord Energy Corp and PDC Energy, you can compare the effects of market volatilities on Chord Energy and PDC 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 Chord Energy with a short position of PDC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chord Energy and PDC Energy.
Diversification Opportunities for Chord Energy and PDC Energy
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chord and PDC is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Chord Energy Corp and PDC Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PDC Energy and Chord 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 Chord Energy Corp are associated (or correlated) with PDC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PDC Energy has no effect on the direction of Chord Energy i.e., Chord Energy and PDC Energy go up and down completely randomly.
Pair Corralation between Chord Energy and PDC Energy
Given the investment horizon of 90 days Chord Energy Corp is expected to under-perform the PDC Energy. In addition to that, Chord Energy is 1.34 times more volatile than PDC Energy. It trades about -0.01 of its total potential returns per unit of risk. PDC Energy is currently generating about 0.34 per unit of volatility. If you would invest 7,071 in PDC Energy on August 28, 2024 and sell it today you would earn a total of 430.00 from holding PDC Energy or generate 6.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.24% |
| Values | Daily Returns |
Chord Energy Corp vs. PDC Energy
Performance |
| Timeline |
| Chord Energy Corp |
| PDC Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Chord Energy and PDC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chord Energy and PDC Energy
The main advantage of trading using opposite Chord Energy and PDC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chord Energy position performs unexpectedly, PDC 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 PDC Energy will offset losses from the drop in PDC Energy's long position.| Chord Energy vs. ConocoPhillips | Chord Energy vs. Occidental Petroleum | Chord Energy vs. EOG Resources | Chord Energy vs. Coterra Energy |
| PDC Energy vs. Devon Energy | PDC Energy vs. Coterra Energy | PDC Energy vs. Diamondback Energy | PDC Energy vs. EOG Resources |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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