Correlation Between Civitas Resources and Vital Energy
Can any of the company-specific risk be diversified away by investing in both Civitas Resources and Vital 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 Civitas Resources and Vital Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Civitas Resources and Vital Energy, you can compare the effects of market volatilities on Civitas Resources and Vital 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 Civitas Resources with a short position of Vital Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Civitas Resources and Vital Energy.
Diversification Opportunities for Civitas Resources and Vital Energy
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Civitas and Vital is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Civitas Resources and Vital Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vital Energy 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 Vital Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vital Energy has no effect on the direction of Civitas Resources i.e., Civitas Resources and Vital Energy go up and down completely randomly.
Pair Corralation between Civitas Resources and Vital Energy
Given the investment horizon of 90 days Civitas Resources is expected to generate 0.76 times more return on investment than Vital Energy. However, Civitas Resources is 1.32 times less risky than Vital Energy. It trades about -0.04 of its potential returns per unit of risk. Vital Energy is currently generating about -0.04 per unit of risk. If you would invest 6,517 in Civitas Resources on August 24, 2024 and sell it today you would lose (1,289) from holding Civitas Resources or give up 19.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Civitas Resources vs. Vital Energy
Performance |
| Timeline |
| Civitas Resources |
| Vital Energy |
Civitas Resources and Vital Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Civitas Resources and Vital Energy
The main advantage of trading using opposite Civitas Resources and Vital Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Civitas Resources position performs unexpectedly, Vital 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 Vital Energy will offset losses from the drop in Vital Energy'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 |
| Vital Energy vs. SM Energy Co | Vital Energy vs. Permian Resources | Vital Energy vs. Matador Resources | Vital Energy vs. Obsidian 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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