Correlation Between California Resources and Southwestern Energy
Can any of the company-specific risk be diversified away by investing in both California Resources and Southwestern 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 California Resources and Southwestern Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California Resources Corp and Southwestern Energy, you can compare the effects of market volatilities on California Resources and Southwestern 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 California Resources with a short position of Southwestern Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Resources and Southwestern Energy.
Diversification Opportunities for California Resources and Southwestern Energy
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between California and Southwestern is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding California Resources Corp and Southwestern Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwestern Energy and California Resources 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 California Resources Corp are associated (or correlated) with Southwestern Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southwestern Energy has no effect on the direction of California Resources i.e., California Resources and Southwestern Energy go up and down completely randomly.
Pair Corralation between California Resources and Southwestern Energy
If you would invest 5,197 in California Resources Corp on September 1, 2024 and sell it today you would earn a total of 719.00 from holding California Resources Corp or generate 13.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
California Resources Corp vs. Southwestern Energy
Performance |
| Timeline |
| California Resources Corp |
| Southwestern Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Strong
California Resources and Southwestern Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Resources and Southwestern Energy
The main advantage of trading using opposite California Resources and Southwestern Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Resources position performs unexpectedly, Southwestern 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 Southwestern Energy will offset losses from the drop in Southwestern Energy's long position.| California Resources vs. Berry Petroleum Corp | California Resources vs. Magnolia Oil Gas | California Resources vs. Comstock Resources | California Resources vs. Gulfport Energy Operating |
| Southwestern Energy vs. Antero Resources Corp | Southwestern Energy vs. EQT Corporation | Southwestern Energy vs. Matador Resources | Southwestern Energy vs. Range Resources Corp |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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