Correlation Between Coastal Caribbean and Barnwell Industries
Can any of the company-specific risk be diversified away by investing in both Coastal Caribbean and Barnwell Industries 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 Coastal Caribbean and Barnwell Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coastal Caribbean Oils and Barnwell Industries, you can compare the effects of market volatilities on Coastal Caribbean and Barnwell Industries 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 Coastal Caribbean with a short position of Barnwell Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coastal Caribbean and Barnwell Industries.
Diversification Opportunities for Coastal Caribbean and Barnwell Industries
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Coastal and Barnwell is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Coastal Caribbean Oils and Barnwell Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnwell Industries and Coastal Caribbean 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 Coastal Caribbean Oils are associated (or correlated) with Barnwell Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barnwell Industries has no effect on the direction of Coastal Caribbean i.e., Coastal Caribbean and Barnwell Industries go up and down completely randomly.
Pair Corralation between Coastal Caribbean and Barnwell Industries
Assuming the 90 days horizon Coastal Caribbean Oils is expected to generate 27.79 times more return on investment than Barnwell Industries. However, Coastal Caribbean is 27.79 times more volatile than Barnwell Industries. It trades about 0.08 of its potential returns per unit of risk. Barnwell Industries is currently generating about -0.03 per unit of risk. If you would invest 0.01 in Coastal Caribbean Oils on August 24, 2024 and sell it today you would earn a total of 0.00 from holding Coastal Caribbean Oils or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 31.92% |
| Values | Daily Returns |
Coastal Caribbean Oils vs. Barnwell Industries
Performance |
| Timeline |
| Coastal Caribbean Oils |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Barnwell Industries |
Coastal Caribbean and Barnwell Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coastal Caribbean and Barnwell Industries
The main advantage of trading using opposite Coastal Caribbean and Barnwell Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coastal Caribbean position performs unexpectedly, Barnwell Industries 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 Barnwell Industries will offset losses from the drop in Barnwell Industries' long position.| Coastal Caribbean vs. Strat Petroleum | Coastal Caribbean vs. Imperial Res | Coastal Caribbean vs. Century Petroleum Corp |
| Barnwell Industries vs. Houston American Energy | Barnwell Industries vs. Mexco Energy | Barnwell Industries vs. PHX Minerals | Barnwell Industries vs. Ring 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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