Correlation Between Crescent Energy and Riley Exploration
Can any of the company-specific risk be diversified away by investing in both Crescent Energy and Riley Exploration 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 Riley Exploration 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 Riley Exploration Permian, you can compare the effects of market volatilities on Crescent Energy and Riley Exploration 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 Riley Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crescent Energy and Riley Exploration.
Diversification Opportunities for Crescent Energy and Riley Exploration
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Crescent and Riley is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Energy Co and Riley Exploration Permian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riley Exploration Permian 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 Riley Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riley Exploration Permian has no effect on the direction of Crescent Energy i.e., Crescent Energy and Riley Exploration go up and down completely randomly.
Pair Corralation between Crescent Energy and Riley Exploration
Given the investment horizon of 90 days Crescent Energy is expected to generate 1.29 times less return on investment than Riley Exploration. But when comparing it to its historical volatility, Crescent Energy Co is 1.21 times less risky than Riley Exploration. It trades about 0.07 of its potential returns per unit of risk. Riley Exploration Permian is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,074 in Riley Exploration Permian on November 3, 2024 and sell it today you would earn a total of 1,241 from holding Riley Exploration Permian or generate 59.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crescent Energy Co vs. Riley Exploration Permian
Performance |
| Timeline |
| Crescent Energy |
| Riley Exploration Permian |
Crescent Energy and Riley Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crescent Energy and Riley Exploration
The main advantage of trading using opposite Crescent Energy and Riley Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crescent Energy position performs unexpectedly, Riley Exploration 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 Riley Exploration will offset losses from the drop in Riley Exploration's long position.| Crescent Energy vs. Vital Energy | Crescent Energy vs. Permian Resources | Crescent Energy vs. Magnolia Oil Gas | Crescent Energy vs. Ring Energy |
| Riley Exploration vs. Vital Energy | Riley Exploration vs. Permian Resources | Riley Exploration vs. Magnolia Oil Gas | Riley Exploration vs. Ring Energy |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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