Correlation Between Coastal Caribbean and SilverBow Resources
Can any of the company-specific risk be diversified away by investing in both Coastal Caribbean and SilverBow Resources 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 SilverBow Resources 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 SilverBow Resources, you can compare the effects of market volatilities on Coastal Caribbean and SilverBow Resources 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 SilverBow Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coastal Caribbean and SilverBow Resources.
Diversification Opportunities for Coastal Caribbean and SilverBow Resources
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Coastal and SilverBow is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Coastal Caribbean Oils and SilverBow Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SilverBow Resources 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 SilverBow Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SilverBow Resources has no effect on the direction of Coastal Caribbean i.e., Coastal Caribbean and SilverBow Resources go up and down completely randomly.
Pair Corralation between Coastal Caribbean and SilverBow Resources
Assuming the 90 days horizon Coastal Caribbean Oils is expected to generate 2.74 times more return on investment than SilverBow Resources. However, Coastal Caribbean is 2.74 times more volatile than SilverBow Resources. It trades about 0.07 of its potential returns per unit of risk. SilverBow Resources is currently generating about -0.02 per unit of risk. If you would invest 0.01 in Coastal Caribbean Oils on November 1, 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 Together |
| Strength | Insignificant |
| Accuracy | 26.36% |
| Values | Daily Returns |
Coastal Caribbean Oils vs. SilverBow Resources
Performance |
| Timeline |
| Coastal Caribbean Oils |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| SilverBow Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Coastal Caribbean and SilverBow Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coastal Caribbean and SilverBow Resources
The main advantage of trading using opposite Coastal Caribbean and SilverBow Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coastal Caribbean position performs unexpectedly, SilverBow Resources 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 SilverBow Resources will offset losses from the drop in SilverBow Resources' long position.| Coastal Caribbean vs. Strat Petroleum | Coastal Caribbean vs. Imperial Res | Coastal Caribbean vs. Century Petroleum Corp |
| SilverBow Resources vs. Vital Energy | SilverBow Resources vs. Permian Resources | SilverBow Resources vs. Magnolia Oil Gas | SilverBow Resources 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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