Correlation Between Civitas Resources and XXL Energy
Can any of the company-specific risk be diversified away by investing in both Civitas Resources and XXL 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 XXL 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 XXL Energy Corp, you can compare the effects of market volatilities on Civitas Resources and XXL 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 XXL Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Civitas Resources and XXL Energy.
Diversification Opportunities for Civitas Resources and XXL Energy
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Civitas and XXL is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Civitas Resources and XXL Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XXL Energy Corp 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 XXL Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XXL Energy Corp has no effect on the direction of Civitas Resources i.e., Civitas Resources and XXL Energy go up and down completely randomly.
Pair Corralation between Civitas Resources and XXL Energy
Given the investment horizon of 90 days Civitas Resources is expected to generate 0.24 times more return on investment than XXL Energy. However, Civitas Resources is 4.12 times less risky than XXL Energy. It trades about -0.11 of its potential returns per unit of risk. XXL Energy Corp is currently generating about -0.09 per unit of risk. If you would invest 7,176 in Civitas Resources on August 24, 2024 and sell it today you would lose (1,948) from holding Civitas Resources or give up 27.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Civitas Resources vs. XXL Energy Corp
Performance |
| Timeline |
| Civitas Resources |
| XXL Energy Corp |
Civitas Resources and XXL Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Civitas Resources and XXL Energy
The main advantage of trading using opposite Civitas Resources and XXL Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Civitas Resources position performs unexpectedly, XXL 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 XXL Energy will offset losses from the drop in XXL 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 |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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