Correlation Between Crescent Energy and PetroShale
Can any of the company-specific risk be diversified away by investing in both Crescent Energy and PetroShale 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 Energy and PetroShale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crescent Energy Co and PetroShale, you can compare the effects of market volatilities on Crescent Energy and PetroShale 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 Energy with a short position of PetroShale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crescent Energy and PetroShale.
Diversification Opportunities for Crescent Energy and PetroShale
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Crescent and PetroShale is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Energy Co and PetroShale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroShale and Crescent Energy 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 Energy Co are associated (or correlated) with PetroShale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetroShale has no effect on the direction of Crescent Energy i.e., Crescent Energy and PetroShale go up and down completely randomly.
Pair Corralation between Crescent Energy and PetroShale
Given the investment horizon of 90 days Crescent Energy Co is expected to generate 0.83 times more return on investment than PetroShale. However, Crescent Energy Co is 1.21 times less risky than PetroShale. It trades about 0.78 of its potential returns per unit of risk. PetroShale is currently generating about 0.32 per unit of risk. If you would invest 1,351 in Crescent Energy Co on October 23, 2024 and sell it today you would earn a total of 311.00 from holding Crescent Energy Co or generate 23.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crescent Energy Co vs. PetroShale
Performance |
| Timeline |
| Crescent Energy |
| PetroShale |
Crescent Energy and PetroShale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crescent Energy and PetroShale
The main advantage of trading using opposite Crescent Energy and PetroShale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crescent Energy position performs unexpectedly, PetroShale 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 PetroShale will offset losses from the drop in PetroShale's long position.| Crescent Energy vs. Vital Energy | Crescent Energy vs. Permian Resources | Crescent Energy vs. Magnolia Oil Gas | Crescent Energy vs. Ring Energy |
| PetroShale vs. Dno ASA | PetroShale vs. Horizon Oil Limited | PetroShale vs. Enwell Energy plc | PetroShale vs. Tullow Oil plc |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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