Correlation Between Crescent Point and Baytex Energy
Can any of the company-specific risk be diversified away by investing in both Crescent Point and Baytex 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 Crescent Point and Baytex Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crescent Point Energy and Baytex Energy Corp, you can compare the effects of market volatilities on Crescent Point and Baytex 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 Crescent Point with a short position of Baytex Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crescent Point and Baytex Energy.
Diversification Opportunities for Crescent Point and Baytex Energy
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Crescent and Baytex is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Point Energy and Baytex Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baytex Energy Corp and Crescent Point 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 Crescent Point Energy are associated (or correlated) with Baytex Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baytex Energy Corp has no effect on the direction of Crescent Point i.e., Crescent Point and Baytex Energy go up and down completely randomly.
Pair Corralation between Crescent Point and Baytex Energy
Considering the 90-day investment horizon Crescent Point Energy is expected to generate 0.73 times more return on investment than Baytex Energy. However, Crescent Point Energy is 1.38 times less risky than Baytex Energy. It trades about 0.06 of its potential returns per unit of risk. Baytex Energy Corp is currently generating about -0.02 per unit of risk. If you would invest 678.00 in Crescent Point Energy on August 27, 2024 and sell it today you would earn a total of 121.00 from holding Crescent Point Energy or generate 17.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 62.9% |
| Values | Daily Returns |
Crescent Point Energy vs. Baytex Energy Corp
Performance |
| Timeline |
| Crescent Point Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Baytex Energy Corp |
Crescent Point and Baytex Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crescent Point and Baytex Energy
The main advantage of trading using opposite Crescent Point and Baytex Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crescent Point position performs unexpectedly, Baytex 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 Baytex Energy will offset losses from the drop in Baytex Energy's long position.| Crescent Point vs. Vermilion Energy | Crescent Point vs. Canadian Natural Resources | Crescent Point vs. Baytex Energy Corp | Crescent Point vs. Ovintiv |
| Baytex Energy vs. Vermilion Energy | Baytex Energy vs. Obsidian Energy | Baytex Energy vs. Canadian Natural Resources | Baytex Energy vs. Ovintiv |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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