Correlation Between ConocoPhillips and Carnarvon Petroleum
Can any of the company-specific risk be diversified away by investing in both ConocoPhillips and Carnarvon Petroleum 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 Carnarvon Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ConocoPhillips and Carnarvon Petroleum Limited, you can compare the effects of market volatilities on ConocoPhillips and Carnarvon Petroleum 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 Carnarvon Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of ConocoPhillips and Carnarvon Petroleum.
Diversification Opportunities for ConocoPhillips and Carnarvon Petroleum
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ConocoPhillips and Carnarvon is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding ConocoPhillips and Carnarvon Petroleum Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnarvon Petroleum 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 Carnarvon Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnarvon Petroleum has no effect on the direction of ConocoPhillips i.e., ConocoPhillips and Carnarvon Petroleum go up and down completely randomly.
Pair Corralation between ConocoPhillips and Carnarvon Petroleum
Considering the 90-day investment horizon ConocoPhillips is expected to generate 0.58 times more return on investment than Carnarvon Petroleum. However, ConocoPhillips is 1.71 times less risky than Carnarvon Petroleum. It trades about 0.13 of its potential returns per unit of risk. Carnarvon Petroleum Limited is currently generating about -0.21 per unit of risk. If you would invest 10,161 in ConocoPhillips on August 30, 2024 and sell it today you would earn a total of 578.00 from holding ConocoPhillips or generate 5.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
ConocoPhillips vs. Carnarvon Petroleum Limited
Performance |
| Timeline |
| ConocoPhillips |
| Carnarvon Petroleum |
ConocoPhillips and Carnarvon Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ConocoPhillips and Carnarvon Petroleum
The main advantage of trading using opposite ConocoPhillips and Carnarvon Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ConocoPhillips position performs unexpectedly, Carnarvon Petroleum 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 Carnarvon Petroleum will offset losses from the drop in Carnarvon Petroleum's long position.| ConocoPhillips vs. Diamondback Energy | ConocoPhillips vs. APA Corporation | ConocoPhillips vs. Hess Corporation | ConocoPhillips vs. Coterra Energy |
| Carnarvon Petroleum vs. 88 Energy Limited | Carnarvon Petroleum vs. MMEX Resources Corp | Carnarvon Petroleum vs. Africa Oil Corp | Carnarvon Petroleum vs. Reconnaissance Energy Africa |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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