Correlation Between Comstock Resources and PrimeEnergy
Can any of the company-specific risk be diversified away by investing in both Comstock Resources and PrimeEnergy 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 Comstock Resources and PrimeEnergy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Comstock Resources and PrimeEnergy, you can compare the effects of market volatilities on Comstock Resources and PrimeEnergy 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 Comstock Resources with a short position of PrimeEnergy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comstock Resources and PrimeEnergy.
Diversification Opportunities for Comstock Resources and PrimeEnergy
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Comstock and PrimeEnergy is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Comstock Resources and PrimeEnergy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PrimeEnergy and Comstock 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 Comstock Resources are associated (or correlated) with PrimeEnergy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PrimeEnergy has no effect on the direction of Comstock Resources i.e., Comstock Resources and PrimeEnergy go up and down completely randomly.
Pair Corralation between Comstock Resources and PrimeEnergy
Considering the 90-day investment horizon Comstock Resources is expected to generate 1.51 times less return on investment than PrimeEnergy. In addition to that, Comstock Resources is 1.04 times more volatile than PrimeEnergy. It trades about 0.07 of its total potential returns per unit of risk. PrimeEnergy is currently generating about 0.11 per unit of volatility. If you would invest 10,501 in PrimeEnergy on August 24, 2024 and sell it today you would earn a total of 10,099 from holding PrimeEnergy or generate 96.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Comstock Resources vs. PrimeEnergy
Performance |
| Timeline |
| Comstock Resources |
| PrimeEnergy |
Comstock Resources and PrimeEnergy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Comstock Resources and PrimeEnergy
The main advantage of trading using opposite Comstock Resources and PrimeEnergy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comstock Resources position performs unexpectedly, PrimeEnergy 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 PrimeEnergy will offset losses from the drop in PrimeEnergy's long position.| Comstock Resources vs. Range Resources Corp | Comstock Resources vs. Permian Resources | Comstock Resources vs. EQT Corporation | Comstock Resources vs. Vital Energy |
| PrimeEnergy vs. Houston American Energy | PrimeEnergy vs. Mexco Energy | PrimeEnergy vs. Ring Energy | PrimeEnergy vs. Permianville Royalty Trust |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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