Correlation Between ConocoPhillips and APA
Can any of the company-specific risk be diversified away by investing in both ConocoPhillips and APA 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 ConocoPhillips and APA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ConocoPhillips and APA Corporation, you can compare the effects of market volatilities on ConocoPhillips and APA 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 ConocoPhillips with a short position of APA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ConocoPhillips and APA.
Diversification Opportunities for ConocoPhillips and APA
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ConocoPhillips and APA is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding ConocoPhillips and APA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APA Corporation and ConocoPhillips 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 ConocoPhillips are associated (or correlated) with APA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APA Corporation has no effect on the direction of ConocoPhillips i.e., ConocoPhillips and APA go up and down completely randomly.
Pair Corralation between ConocoPhillips and APA
Considering the 90-day investment horizon ConocoPhillips is expected to generate 0.69 times more return on investment than APA. However, ConocoPhillips is 1.44 times less risky than APA. It trades about 0.01 of its potential returns per unit of risk. APA Corporation is currently generating about -0.04 per unit of risk. If you would invest 11,130 in ConocoPhillips on August 24, 2024 and sell it today you would earn a total of 45.00 from holding ConocoPhillips or generate 0.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ConocoPhillips vs. APA Corp.
Performance |
| Timeline |
| ConocoPhillips |
| APA Corporation |
ConocoPhillips and APA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ConocoPhillips and APA
The main advantage of trading using opposite ConocoPhillips and APA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ConocoPhillips position performs unexpectedly, APA 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 APA will offset losses from the drop in APA's long position.| ConocoPhillips vs. Diamondback Energy | ConocoPhillips vs. APA Corporation | ConocoPhillips vs. Hess Corporation | ConocoPhillips vs. Coterra 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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