Correlation Between Civitas Resources and Falcon Oil
Can any of the company-specific risk be diversified away by investing in both Civitas Resources and Falcon 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 Civitas Resources and Falcon Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Civitas Resources and Falcon Oil Gas, you can compare the effects of market volatilities on Civitas Resources and Falcon 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 Civitas Resources with a short position of Falcon Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Civitas Resources and Falcon Oil.
Diversification Opportunities for Civitas Resources and Falcon Oil
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Civitas and Falcon is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Civitas Resources and Falcon Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Oil Gas and Civitas Resources 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 Civitas Resources are associated (or correlated) with Falcon Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Oil Gas has no effect on the direction of Civitas Resources i.e., Civitas Resources and Falcon Oil go up and down completely randomly.
Pair Corralation between Civitas Resources and Falcon Oil
Given the investment horizon of 90 days Civitas Resources is expected to generate 7.11 times less return on investment than Falcon Oil. But when comparing it to its historical volatility, Civitas Resources is 4.35 times less risky than Falcon Oil. It trades about 0.17 of its potential returns per unit of risk. Falcon Oil Gas is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 6.00 in Falcon Oil Gas on November 3, 2024 and sell it today you would earn a total of 3.00 from holding Falcon Oil Gas or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Civitas Resources vs. Falcon Oil Gas
Performance |
| Timeline |
| Civitas Resources |
| Falcon Oil Gas |
Civitas Resources and Falcon Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Civitas Resources and Falcon Oil
The main advantage of trading using opposite Civitas Resources and Falcon Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Civitas Resources position performs unexpectedly, Falcon 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 Falcon Oil will offset losses from the drop in Falcon Oil's long position.| Civitas Resources vs. Magnolia Oil Gas | Civitas Resources vs. SM Energy Co | Civitas Resources vs. Range Resources Corp | Civitas Resources vs. Matador Resources |
| Falcon Oil vs. Gulf Keystone Petroleum | Falcon Oil vs. Maverick Energy Group | Falcon Oil vs. North European Oil | Falcon Oil vs. SandRidge 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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