Correlation Between ConocoPhillips and Diamondback Energy
Can any of the company-specific risk be diversified away by investing in both ConocoPhillips and Diamondback 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 ConocoPhillips and Diamondback Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ConocoPhillips and Diamondback Energy, you can compare the effects of market volatilities on ConocoPhillips and Diamondback 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 ConocoPhillips with a short position of Diamondback Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ConocoPhillips and Diamondback Energy.
Diversification Opportunities for ConocoPhillips and Diamondback Energy
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ConocoPhillips and Diamondback is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding ConocoPhillips and Diamondback Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamondback Energy 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 Diamondback Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamondback Energy has no effect on the direction of ConocoPhillips i.e., ConocoPhillips and Diamondback Energy go up and down completely randomly.
Pair Corralation between ConocoPhillips and Diamondback Energy
Considering the 90-day investment horizon ConocoPhillips is expected to generate 1.15 times more return on investment than Diamondback Energy. However, ConocoPhillips is 1.15 times more volatile than Diamondback Energy. It trades about 0.08 of its potential returns per unit of risk. Diamondback Energy is currently generating about 0.04 per unit of risk. If you would invest 10,254 in ConocoPhillips on August 27, 2024 and sell it today you would earn a total of 356.00 from holding ConocoPhillips or generate 3.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ConocoPhillips vs. Diamondback Energy
Performance |
| Timeline |
| ConocoPhillips |
| Diamondback Energy |
ConocoPhillips and Diamondback Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ConocoPhillips and Diamondback Energy
The main advantage of trading using opposite ConocoPhillips and Diamondback Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ConocoPhillips position performs unexpectedly, Diamondback 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 Diamondback Energy will offset losses from the drop in Diamondback Energy's long position.| ConocoPhillips vs. Diamondback Energy | ConocoPhillips vs. APA Corporation | ConocoPhillips vs. Hess Corporation | ConocoPhillips vs. Coterra Energy |
| Diamondback Energy vs. Devon Energy | Diamondback Energy vs. Coterra Energy | Diamondback Energy vs. EOG Resources | Diamondback Energy vs. ConocoPhillips |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |